“Unjustified” and “not the way that friends and allies should be treated”. That’s how Prime Minister Anthony Albanese and Foreign Minister Penny Wong have described the latest shot in President Trump’s trade war – which will see a 25% tariff slapped on all US imports of steel and aluminium from 3 pm today (AEDT).
Overnight White House spokeswoman Karoline Leavitt dashed hopes Donald Trump would fully exempt Australia as he did during his first administration, telling media: “He considered it and considered against it. There will be no exemptions”. When asked why, Ms Leavitt said, “American-first steel. And if they want to be exempted, they should consider moving steel manufacturing here.”
According to David Buchanan, CEO of the Australian Steel Association, the tariffs will have a minimal impact (at least in the short term) on the domestic steel supply because most of the exports are used for internal processing at BluScope Steel’s factory in Ohio. “At this stage, there’s probably minimal impact on Australia, and I would suggest that it’s not a huge impact for BlueScope,” he told ABC radio. “Unfortunately, it’ll be passed onto the American consumer.”
However, if and when Trump slaps China with a second and third round of tariffs, things could change drastically, leading to overseas importers “dumping” an oversupply of steel into the Australian market – and potentially hitting the country’s framing market (about 20% of Australian new builds now use steel-framing). Until then, Jon Davies, the CEO of the Australian Constructors Association, said tariffs would mean further uncertainty for an industry already weathering material price increases in the wake of Covid and the Ukraine war.
“Any additional hit to the construction industry at this time will be extremely problematic. It has no contingencies left to weather any significant impacts or downturns.”
Jon Davies, CEO of the Australian Contractors Association, discussed the impact of tariffs on the local steel supply chain and aluminium.
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 about the impact of tariffs on steel, aluminium and timber 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.”
As it stands, the Australian dollar is trading at 0.653 to the United States dollar. A strong greenback, a weakening Chinese economy, and sluggish domestic demand make imports at home more expensive but also help 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 tariffs on the Australian economy, click here for an article from the UNSW Business School’s Dr Scott French.
