Trade Tensions Escalate with New US Tariff Hike
Australia’s trade relationship with the United States is under renewed strain following Donald Trump’s announcement to double tariffs on steel and aluminium imports, raising them from 25% to 50%. Speaking at a rally in Pittsburgh, Trump claimed the increase would “further secure the steel industry in the United States. Nobody is going to get around that.”
The decision, which takes effect from 4 June, has drawn strong criticism from Australian Trade Minister Don Farrell, who condemned the move as “unjustified and not the act of a friend.” His remarks underscore growing concerns in Canberra over the impact of protectionist US trade policies on long-standing allies.
Don Farrell Labels Move as Economic Self-Harm
Farrell did not hold back in his response to the US president’s decision. “These tariffs are unjustified and not the act of a friend,” he said. “They are an act of economic self-harm that will only hurt consumers and businesses who rely on free and fair trade. We will continue to engage and advocate strongly for the removal of the tariffs.”
The trade minister’s words echo previous criticisms made when the initial 25% tariff was introduced. At the time, both Farrell and Prime Minister Anthony Albanese argued the policy undermined the spirit of friendship and cooperation between Australia and the United States.
Don Farrell, Senator for South Australia, Minister for Trade and Tourism, Special Minister of State, and Deputy Leader of the Government in the Senate.
Opposition Calls for Stronger Government Action
The opposition has joined in the criticism, with Shadow Trade Minister Kevin Hogan warning of potential job losses in Australia’s steel sector. “The Albanese government needs to double its efforts to protect our steel industry and local jobs for our steelworkers,” Hogan said.
He emphasised that the United States should honour its commitments under the Australia-United States Free Trade Agreement (AUSFTA). “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,” he added.
Hogan also urged Prime Minister Albanese to secure a face-to-face meeting with Trump during the upcoming G7 summit in Canada. “The Coalition want the government to succeed because that is in the national interest,” he noted.
Economic and Trade Experts Weigh In
While the US is not a major market for Australian steel—accounting for only about 2.5% of US aluminium imports—industry leaders fear broader global consequences. Marghanita Johnson, CEO of the Australian Aluminium Council, expressed concern about potential trade distortions. “The council will keep working with the government,” she said.
Mark Cain, CEO of the Australian Steel Institute, was similarly apprehensive. “One of the concerns we have is that the subsequent disruptions to global steel trade could see Australia become a dumping ground for imported steel,” he said. “It could exacerbate the surge in imported low-priced steel that is damaging the industry.”
BlueScope Steel, one of Australia’s key steel exporters, has also expressed disappointment. In March, when the initial tariffs came into effect, the company highlighted its lack of exemption compared to Trump’s first term in office. With over 3 million tonnes of steel produced at its Ohio plant, BlueScope exports around 300,000 tonnes annually to the US and is working closely with Australian diplomats to safeguard its interests.
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Economist: Tariffs Will Hurt US More Than Australia
Renowned Australian economist Professor Justin Wolfers, based at the University of Michigan, believes the impact on Australia’s economy will be minimal. “We are talking about very small numbers of people [who work in the steel industry in the US]. But steel is used as an input for a broad array of manufacturing jobs. Steel will be more expensive – even American steel,” he explained.
Wolfers highlighted that the US steel industry is relatively small, making up just 4% of global production. “You might get a little bit of expansion of this tiny sector, but in exchange, you’re going to have much higher costs for the rest of the economy,” he said.
He pointed to an analysis of Trump’s 2018 steel tariffs, which found they created approximately 1,000 steel jobs at the cost of 75,000 manufacturing jobs due to increased input costs. “They’re going to cost the United States jobs. They’re going to make things more expensive,” Wolfers said. “It’s probably going to cost about a million bucks per job saved.”
Concerns Over Trade Policy Stability
Beyond the immediate economic effects, Wolfers raised broader concerns about the unpredictability of US trade policy under Trump. “If on a Friday afternoon while you happen to be visiting a steel plant, you just flick out [a decision]… it kind of makes you wonder where’s the bloke visiting next week,” he remarked.
This sentiment is echoed by other observers who view Trump’s tariff approach as chaotic and impulsive, with potentially destabilising effects on global trade norms.
Australia Caught in Political Crossfire
While Australia’s steel and aluminium exports to the US represent a modest share of its overall trade, the symbolic impact of the tariff hike is far more significant. It challenges the integrity of AUSFTA and raises questions about the future reliability of US trade commitments.
Both government and industry leaders in Australia are now faced with the task of navigating an increasingly volatile global trade environment, while continuing to advocate for the principles of open markets and international cooperation.
With the G7 summit on the horizon, all eyes will be on whether Prime Minister Albanese can secure a productive dialogue with President Trump. The stakes are not just economic—they are diplomatic, strategic, and emblematic of a broader struggle over the future of international trade.
