Donald Trump has shaken the global supply chain of steel and aluminium to its foundations, slapping a 25% tariff on all US-bound imports – which he said will hit “everybody”, including long-term allies South Korea, Japan and Australia – amongst the top markets for steel and aluminium.
“Steel. Any steel (and aluminium) coming into the United States is going to have a 25% tariff.”
President Trump told reporters aboard Air Force One on the way to the Superbowl.
Already, the threat has seen more than AU $15 billion wiped from the Australian Stock Exchange in the 90 minutes after the proclamation – which exported more than AU $638 million worth of steel last year, with economist Stephen Innes warning that Asian markets were scrambling for their “trade war helmets” on Monday morning:
“Trump’s latest move isn’t merely another trade skirmish. It’s an escalation of his ‘America First’ trade doctrine where ‘no country is off limits’,” he said. “This high-stakes gamble could disrupt global supply chains.”
The high-stakes gamble has already seen Trump threaten to put a 25% tariff on the US $3 billion worth of Canadian lumber that crosses the North American border every year (since delayed for 30 days), with David Littleproud – leader of Australia’s leading country party, the Nationals – warning that it was incumbent on the Albanese government to ensure that Australia was not tied up in future tariffs.
“We’re a trading nation, and I can tell you that tariffs not even imposed on us, but imposed on other parts of the world still have inflationary impacts for us in what we consume,” he said. “It’s important that we encourage and use our place in the world to encourage all countries to adhere by (rules-based order of trade) because a tariff war will not benefit anybody, and Australia will not be immune from that.”
Will the dollar save Australia from the wrath of Trump’s tariffs?
“It’s too early to tell what impact these new tariffs, if they ever actually come into effect, will do for the price and supply of framing, windows and doors,” according to an Australian-based trader who spoke to Wood Central this morning on the condition of anonymity. “However, given how weak the Aussie dollar is right now, it’s possible that Australian imports will still be (relatively) competitive even with the new tariffs.
The Australian dollar is trading at 0.63 to the United States dollar – with a strong greenback, a weakening Chinese economy and sluggish domestic demand, making imports at home much more expensive but helping exports in global markets.
According to Evan Lucas, an economic futurist, the fortunes of the Aussie currency are being shaped by events in Washington and Beijing: “We’ve been playing up with two sides; the US threatening tariffs on China has pressured our biggest trading partner. The Australian dollar is seen as a proxy to the Chinese economy, which is why it has declined the way it has … we then have the Chinese devaluing their currency to make their exports more appealing to the rest of the world.”
- To learn more about the impact of Trump’s tariff plans and its impact on the US $50 billion trade in timber products, click here for Wood Central’s special feature. To learn more about timber and steel framing and the impact of price and supply on the Australian frame and truss market, click here for more information.
