back to top
Monday, July 28, 2025

Australia Condemns Trump’s Tariff Hike as ‘Not the Act of a Friend’

Share

The Australian government has sharply criticised US President Donald Trump’s decision to double import duties on steel and aluminium from 25% to 50%, effective from June 4. Australia’s Minister for Trade, Don Farrell, described the move as “unjustified and not the act of a friend,” calling it “an act of economic self-harm” that will hurt consumers and businesses on both sides of the Pacific. Although Australia exports relatively little steel and aluminium to the United States—approximately 2.5% of US aluminium imports by volume come from Australia—Australia’s trade minister says Canberra will continue to press Washington to remove the tariffs.

Trump’s Rationale for Raising Tariffs
Speaking before a cheering audience of steelworkers in Pittsburgh, President Trump defended his decision, declaring that a 50% tariff “will even further secure the steel industry in the United States. Nobody is going to get around that.” He argued that the higher duties would protect American jobs in the steel and aluminium sectors by making foreign imports more expensive. “We are going to put America first and protect our domestic industries,” Trump said. In a follow-up social media post, he clarified that the tariff increase would apply to all steel and aluminium imports, maintaining that the 25% duty had not been sufficient to prevent unfair competition from overseas producers.

Australia’s Trade Minister Responds
In a strongly worded statement released on May 31, Trade Minister Don Farrell reiterated Australia’s longstanding position that the US steel and aluminium tariffs under Section 232 of the Trade Expansion Act are “unjustified and not the act of a friend.” He emphasised that these tariffs represent “economic self-harm” and “will only hurt consumers and businesses who rely on free and fair trade.” Farrell said that although Australian exports of steel to the US are small, any barriers to aluminium and steel trade undermine the principles of the Australia–United States Free Trade Agreement (AUSFTA), which entered into force in 2005 and obliges both countries to uphold open markets.

He pledged that Australia would continue “to engage and advocate strongly for the removal of these tariffs” and stated unequivocally that Canberra would not retaliate with its own tariffs. “What we need to do now is to convince the Americans that this is, in fact, the wrong course of action,” Farrell said in a televised interview. “It’s the wrong policy. It simply pushes up prices for American consumers. And that’s not good for the Americans. And it’s certainly not good for Australian steel and aluminium producers.”

Economic Context: Australia’s Exports of Steel and Aluminium to the US
Australia’s exports to the United States include a modest but significant share of the global steel and aluminium markets. In 2024, Australian steel exports to the US totaled approximately 300,000 tonnes—roughly 2.5% of US steel imports—while Australian aluminium exports represented somewhat under 10% of Australia’s total aluminium exports. Major Australian producers such as BlueScope Steel and Rio Tinto Aluminium have long invested in US facilities: BlueScope operates a steel mill in Ohio, producing over 3 million tonnes of steel annually, and Rio Tinto’s aluminium division supplies metal to aerospace and automotive industries in North America.

BlueScope Steel’s Perspective and Industry Concerns
When the original 25% steel tariff was implemented in March 2018 during President Trump’s first term, firebrands in Washington hailed it as a victory for American labour. Yet companies such as BlueScope Steel found themselves caught in the crossfire. At that time, BlueScope—whose Ohio plant exports roughly 300,000 tonnes of steel a year back into the US supply chain—was disappointed that Australian steel had not received the same exemption as Canada, Mexico, and South Korea under renegotiated trade deals. The company’s CEO released a statement underscoring that BlueScope’s US operations employ over 1,000 American workers and that its presence in the US market bolsters both sides of the supply chain.

Mark Cain, Chief Executive of the Australian Steel Institute, weighed in on May 31, calling the 50% tariff hike “disappointing” and warning of unintended consequences. “One of our major concerns is that disruptions to global steel trade could see Australia become a dumping ground for surplus low‐priced steel,” Cain said. “Cheaper imports flooding into our market could exacerbate the surge in low‐cost steel that is already putting pressure on local producers. It simply exchanges concerns from American steelworkers with vulnerabilities in Australia.”

Domestic Economic Implications for the United States
Economists have consistently noted that the US steel and aluminium tariffs serve more as a political signal than a viable long‐term industrial policy. University of Michigan Professor Justin Wolfers, an Australian‐born economist, told Guardian Australia that while the tariffs may preserve a small number of jobs in US steel mills, they create far greater losses in downstream industries that rely on steel and aluminium inputs—manufacturing jobs in automotive, appliances, and construction. “We’re talking about very small numbers of workers in steel, perhaps a thousand or two, but steel is used in everything from autos to appliances to heavy machinery,” Wolfers remarked. “Raising steel prices by 50% makes every single one of those goods more expensive, costing tens of thousands of jobs in broader manufacturing.”

Wolfers cited research analyzing the impact of the initial 25% tariffs that found roughly 1,000 steel jobs gained offset by approximately 75,000 jobs lost in downstream industries—netting a substantial employment decline. By doubling the tariff to 50%, Wolfers warned that production costs would spike even higher, squeezing small and medium manufacturing businesses and ultimately passing costs onto American consumers.

Australia’s Free Trade Obligations and Diplomatic Channels
Under the AUSFTA, both Australia and the United States pledge to treat each other’s goods “no less favourably” than those of any other trading partner, subject to certain exceptions such as national security. Australia contends that the US steel and aluminium tariffs—including the new 50% duty—violate these obligations. Canberra has repeatedly invoked the AUSFTA’s dispute resolution mechanisms, filing complaints with the Office of the United States Trade Representative (USTR) and pursuing consultations in both formal and informal settings.

On May 31, Minister Farrell reiterated Australia’s diplomatic approach: “We are calling on President Trump to reverse his decision and drop all tariffs. We expect our American partners to honour their free trade commitments, just as Australia has done. We will not let this devolve into tit‐for‐tat retaliation. Our goal is to secure open markets, not provoke a trade war.”

Australia has also signalled that it is willing to elevate the issue to the World Trade Organization (WTO) if consultations in Washington fail to yield a satisfactory resolution. Australia initiated WTO action following the 2018 tariff imposition; though the US claimed national security exemptions under Section 232 of the Trade Expansion Act, several WTO members—including the European Union—argued that the exemptions were unjustified. In September 2020, the WTO’s dispute settlement panel concluded that the US did not provide sufficient evidence that steel and aluminium imports threatened national security. Though the US appealed, procedural delays hampered the final resolution. Australia is now closely monitoring whether the 50% increase will trigger a new WTO challenge or a re‐invigorated push for dispute settlement.

Opposition Voices: Shadow Trade Minister and Industry Groups
The Liberal Party’s Shadow Trade Minister, Kevin Hogan, criticised the Albanese government for not doing enough to defend Australian jobs. On May 31, Hogan urged Prime Minister Anthony Albanese to meet personally with President Trump at the upcoming G7 summit in Canada, scheduled for mid-June, stating: “The Albanese government needs to double its efforts to protect our steel industry and local jobs for our steelworkers. We expect the United States to honour its obligations under the AUSFTA, just as Australia has always done. The strength of our economic partnership has been built on trust and mutual benefit, and any deviation from this agreement undermines the principles of free trade.” Legislators from the Australian Greens and the Nationals offered varying perspectives: Greens Senator Sarah Hanson‐Young denounced Trump’s actions emphatically, dubbing the tariffs “arbitrary protectionism that trivialises free trade and punishes consumers.” Meanwhile, Nationals MP David Littleproud expressed measured concern, acknowledging the small volume of Australian exports affected but insisting that such unilateral measures “set troubling precedents in global trade relations.”

Industry bodies such as the Australian Aluminium Council, led by CEO Marghanita Johnson, warned of “significant disruptions” to global aluminium flows. Johnson said the Council would collaborate closely with the government to monitor market distortions and seek rule‐based reinstatement of pre‐tariff trading conditions. “Our principal worry is that import surges into other markets—particularly Asia and Europe—will be driven by US tariff barriers, precipitating glut conditions that consequently strain Australian producers,” Johnson asserted.

Broader Geopolitical Ramifications and Regional Trade Agreements
Economists and trade experts warn that Trump’s punitive steel and aluminium duties could have ripple effects beyond the US–Australia bilateral dynamic. By making US producers relatively more expensive, some allied countries may shift import patterns—seeking out cheaper suppliers in Asia and Latin America, while US consumers pivot to domestically produced or other sources. This could undercut established supply chains across automotive, aerospace, and construction sectors. Additionally, analysts note that Trump’s protectionist stance may push the US further away from multilateral trade liberalization, driving allies to deepen ties in alternative arrangements. For example, Australia remains a key member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes Canada, Japan, Mexico, and several Southeast Asian nations. With the United Kingdom poised to join CPTPP in 2025, Australia hopes to leverage that agreement as a counterbalance to US unilateralism. Prime Minister Anthony Albanese has publicly endorsed the UK’s CPTPP accession, arguing that “rule‐based trade architecture benefits all our economies.” Similarly, Australia is eager to see the Regional Comprehensive Economic Partnership (RCEP)—the Asia Pacific’s largest free‐trade zone, which includes China, Japan, and South Korea—maintained and strengthened, even as US–China tensions intensify.

Domestic Reactions: Impact on Australian Steel and Aluminium Sectors
Within Australia, steel and aluminium producers reacted cautiously. BlueScope Steel, which operates a major mill in New South Wales and another in Ohio, emphasized that its global footprint and diversified market base would mitigate direct risks. In a May 31 statement, BlueScope said: “While the 50% tariff in the US is disappointing, our strategy has always been to supply multiple markets. We continue to work closely with government trade officials and our US partners to advocate for fair treatment under the AUSFTA.” Rio Tinto Aluminium, another major player, echoed that view, pointing out that the United States accounts for less than 10% of its total aluminium exports. Nonetheless, industry associations stressed that ongoing uncertainty regarding market access could deter new investments in expansion or modernization of Australian smelting and rolling operations.

Economist Andrew Charlton of Australian National University noted that Australian producers have options to redirect exports to growing markets in Southeast Asia and India. “The demand for high‐grade aluminium in EV batteries and aerospace is surging in those regions,” Charlton said. “While the US was historically a reliable offtake partner, Australia’s geographic proximity to Asia makes pivoting relatively seamless—provided logistical infrastructure keeps pace.” Nevertheless, Charlton cautioned that global shipping costs—already elevated due to supply‐chain disruptions—could limit the speed of rerouting shipments.

Consumer and Small‐Business Concerns
Although tariffs affect large producers and exporters, small and medium Australian businesses that rely on imported US‐made machinery or components face cost increases. Manufacturers of agricultural equipment, mining machinery, and prefabricated building materials expressed worries that higher US steel prices might feed through to imported goods, raising input costs. The Australian Industry Group (Ai Group), representing manufacturers, urged the Albanese government to expedite support for affected firms—ranging from advice on seeking alternative suppliers to offering temporary tax or grant relief.

Agriculture and automotive sectors, which depend on US‐sourced implements (e.g., John Deere tractors, Caterpillar earthmoving equipment, and specialised combines), are particularly exposed. The National Farmers’ Federation warned that any uptick in equipment costs could push up operational expenses at a time when yields remain under pressure due to extreme weather events. Similarly, automotive workshops and parts retailers voiced concerns about rising costs for replacement steel panels and aftermarket body parts sourced from the US.

Next Steps: Diplomatic Outreach and Potential WTO Action
Australia’s immediate response includes intensified diplomatic outreach. Trade Minister Don Farrell has scheduled visits to Washington in July and September to directly engage with the USTR and the Office of the US Trade Representative. Officials from the Department of Foreign Affairs and Trade (DFAT) are reportedly preparing background briefs highlighting AUSFTA obligations, the mutual benefits of open markets, and the potential pitfalls of escalating tariffs. Canberra may also lobby other affected nations—such as the European Union, Japan, and South Korea—to coordinate a multilateral response at the WTO. Although US national security exemptions under Section 232 remain a potent trump card, several WTO members have successfully challenged the legality of those exemptions in earlier disputes.

In parallel, Australia is exploring a “friendship” dialogue with US congressional leaders. According to insiders, DFAT aims to enlist sympathetic lawmakers—particularly those representing Midwestern steel states—to underscore how higher tariffs hurt American consumers, manufacturers, and allied defence contractors. By engaging with bipartisan voices such as Senator Sherrod Brown (D‐Ohio) and Senator Todd Young (R‐Indiana), Australia hopes to frame the debate in terms of shared interest in stable, rules‐based trade rather than partisan politics.

Political Imperatives: Prime Minister’s Upcoming G7 Engagement
Prime Minister Anthony Albanese will attend the G7 summit in Quebec, Canada (scheduled June 13–15, 2025). Although US President Trump’s attendance remains uncertain—reports suggest he may send Vice President Mike Pence instead—Albanese is eager to seize any opportunity to raise the tariff issue bilaterally. Shadow Trade Minister Kevin Hogan has pressed for a direct meeting with Trump, arguing that personal rapport is essential to persuading him to reconsider. “Prime Minister Albanese should use the G7 platform not only to engage multilateral leaders but to secure a face‐to‐face conversation with President Trump,” Hogan said on May 31. “Protecting Australian industries is in the national interest, and that begins with direct dialogue.”

Regional and Global Implications for Trade Policy
Trump’s 50% tariffs underscore a broader shift in US trade policy toward unilateral protectionism. In 2018, the Trump administration first deployed Section 232 to impose 25% steel and 10% aluminium duties—citing national security concerns. The World Trade Organization and multiple dispute panels have since pressed Washington to justify these measures with credible national security evidence. With the new 50% levy, many partners worry that the US is backsliding from post‐World War II trade liberalization norms.

For other Asia-Pacific economies—particularly ASEAN members—this development signals potential trade volatility. Countries such as Vietnam, Thailand, and Malaysia have already benefitted from tariff diversion when US duties made Chinese or South Korean steel more expensive, leading American buyers to source from Southeast Asia. However, at 50%, US producers become even more competitive domestically, likely squeezing Southeast Asian exports.

China, which remains Australia’s largest trading partner for both steel and aluminium, is closely monitoring the situation. While increased US duties could boost Chinese exports to third markets, they also risk exacerbating tensions between Beijing and Washington. In turn, Australia must navigate a delicate balance: sustaining strong ties with both the US and China, even as the two superpowers vie for regional influence.

Long‐Term Outlook: Australia’s Trade Diversification
Australia’s reliance on US markets for steel and aluminium is moderate, but the broader lesson is clear: geographic diversification is key to resilience. Agriculture, mining, and education exports have historically underpinned Australia’s economic growth, but manufacturing and processing must also adapt to a multipolar trade environment. Government officials are exploring incentives to encourage Australian steel firms to invest in value‐added processing (e.g., downstream fabrication for automotive, renewable energy wind turbines, and infrastructure projects) that can be exported to Asian markets. Similarly, the Australian Aluminium Council is working with universities and private sector partners on low-carbon smelting technologies—such as inert anode electrolysis—to differentiate Australian aluminium by carbon footprint rather than price alone.

READ MORE: Patients Worry About Future of Healthscope Hospitals as Receivership Looms

By focusing on high‐value, low-emission production, Australia hopes to secure premium markets where environmental credentials command price premiums—offsetting the impact of any US or EU tariff barriers. At the same time, policymakers are negotiating deeper trade agreements with India, the United Kingdom, and select Middle Eastern economies (e.g., the UAE and Saudi Arabia) to open new channels for Australian steel, aluminium, and manufactured goods.

Conclusion: Seeking a Return to Free and Fair Trade
As Australia braces for the ripple effects of a 50% US steel and aluminium tariff, Canberra’s immediate priority remains diplomatic engagement and advocating for a swift reversal. Trade Minister Don Farrell has made it clear that “economic self-harm” serves no one’s long-term interests—neither those of the USA nor its trading partners. By maintaining a steadfast commitment to reciprocal trade principles under the AUSFTA and by pursuing multilateral cooperation at the WTO and G7 levels, Australia seeks to reaffirm the importance of open markets and predictable rules.

While the immediate impact on Australian exports of steel and aluminium may be limited, the broader significance of Trump’s tariff decision reverberates across global supply chains and strategic alliances. Australia’s response thus extends beyond defending specific industries; it represents a defence of the postwar, rule-based trading system that has underpinned global economic growth for decades. In the weeks and months ahead, all eyes will be on Canberra’s ability to secure commitments from Washington to return to free and fair trade—or face the prospect of escalating trade tensions that could reshape partner‐nation relationships for years to come.

Read more

Local News