Canberra: Federal Treasurer Jim Chalmers has downplayed concerns that Australia will be directly impacted by US President Donald Trump's latest trade policies but has left the door open for a response if financial sanctions are imposed.
Governments worldwide are reacting swiftly to Mr. Trump’s decision to introduce—and then pause—tariffs on imports from Canada, Mexico, and China. Mr. Chalmers acknowledged the developments but said they were expected, given Mr. Trump’s campaign rhetoric.
“These decisions from the US are significant, but not surprising,” Mr. Chalmers stated on Tuesday. “We anticipated these possibilities before the election and have taken steps to prepare for different trade scenarios.”
When questioned about whether Australia would impose counter-tariffs if the US targeted Australian exports, Mr. Chalmers emphasized that retaliation was not a preferred option.
“That’s not something we’re considering as a first step,” he said. “We’ve done extensive work in assessing potential trade tensions, and that continues to guide our approach.”
The uncertainty surrounding global trade policy has already impacted Australian financial markets, with both the stock market and the Australian dollar declining on Monday.
Australia currently runs a trade deficit with the US, with American exports to Australia valued at approximately $50 billion last financial year—twice the value of Australian exports to the US, which include beef, meat products, and pharmaceuticals.
Australia’s economy is also vulnerable to any financial penalties imposed on China, its largest trading partner. Given that China’s biggest export market is the US, any economic strain on China could have ripple effects on Australia.
Before departing for the US, Prime Minister Anthony Albanese used a global summit in South America to reinforce Australia’s commitment to free and fair trade. However, if Australia were to respond to potential US tariffs, any countermeasures would likely target American products such as vehicles, machinery, and pharmaceuticals—items that are crucial to US trade but whose higher costs could hurt Australian consumers.
Former Productivity Commission chairman Michael Brennan warned against retaliatory tariffs, arguing that such measures would only increase costs for Australians without significantly influencing US policy.
“Australia would not benefit from raising tariffs on imports,” Brennan wrote in The Australian. “That would harm consumers, slow economic growth, and have little effect on decisions made in Washington or Beijing.”
Trade Minister Don Farrell is seeking discussions with his incoming US counterpart, Howard Lutnick, once he is officially confirmed by the Senate.
Australia was previously exempt from US steel and aluminum tariffs under Mr. Trump’s last administration, with exports of those metals to the US valued at over $800 million in the last financial year. It remains to be seen whether similar exemptions will be granted this time around.
