UPDATED: Speaking with reporters aboard Air Force One on his way to the Super Bowl in New Orleans, United States President Donald Trump said he would impose additional 25% tariffs on steel and aluminium imports into America.
This could directly affect Australian interests as a large exporter of both iron ore and aluminium and comes as the latter is set for record production this year.
He also said he would announce additional reciprocal tariffs on Tuesday or Wednesday to countries that retaliate and that they would take effect almost immediately.
“Any steel coming into the United States is going to have a 25% tariff,” he told reporters Sunday on Air Force One as he flew to New Orleans to attend the Super Bowl.
"Aluminum too” will be subject to the levy Trump said.
A round two hit for some suppliers
During his first term in office, Trump did actually impose tariffs of 25% on steel and 10% on aluminum, for what he said was “a response to the unfair impact of Chinese steel driving down prices and negatively affecting the US steel industry”.
He later granted several trading partners duty-free quotas - including Canada, Mexico, the EU and UK, while Australia was exempt due to a free trade agreement with the U.S.
Not so China, which hit back with retaliatory tariffs of 15% on 120 American products, including fruits, nuts, wine and steel pipes, as well as 25% on U.S. pork and recycled aluminium.
Australia is nervous
Trump's words have sparked a nervous reaction from the Australian Government and businesses in the sector, with Prime Minister Anthony Albanese scheduling a meeting with US President Donald Trump to lobby for Australia's exemption from the hits.
The news wiped a whopping $15bn off the ASX in early trade.
Currently, imports of aluminium, iron and steel into the U.S. from Australia aren't taxed, yet imposing a 25% levy on these major material exports would see demand drop significantly and domestically affect companies such as Rio Tinto and Alcoa.
Australia Industry Group CEO Innes Wilcox says it's up to the Federal Government to move quickly to protect industry and producers from being caught up in a rapidly escalating global trade war.
“We worked with DFAT and trade negotiators during the previous Trump administration and have been doing the same with the new administration to seek to ensure there are zero tariffs for aluminium, steel and iron produced in Australia,” Willox said today.
"A tariff on Australian goods, despite us having a long-standing free trade agreement with the United States and agreements around exemptions for Australian-produced goods during the previous Trump administration, would be a slap in the face for Australian industry and our mutually beneficial economic and security arrangement.
"This decision reminds Australia that nothing can be taken for granted in what is a rapidly changing world.
"This also reinforces that we cannot be sanguine about one of our most important trade and investment links. On trade, the President is simply doing what he said he would do.
“Pollyannaish hopes that we would fly under the radar have proven to be sadly misplaced. That this advice has been given the day after our Deputy Prime Minister was in Washington to hand over billions of dollars to secure the AUKUS submarine deal is particularly troubling.”
