Australia will not retaliate if the Trump administration decides to levy 25 percent tariffs on steel or aluminium imports, according to a Labor cabinet minister.
The comments come after the Australian Prime Minister Anthony Albanese spoke with the U.S. president about a possible exemption for the tariffs given the trade surplus the United States has with Australia (about a two to one ratio).
Industry Minister Ed Husic said Australia would not follow Beijing or Ottawa in imposing its own counter-tariffs, though the latter has paused its retaliation after striking a deal with Trump.
“If we start down this path, it would take years, if not decades, to unpick,” the minister told the National Press Club.
“Only a couple of places in the world make aluminium. Australia is one.
“A country that is a strong ally, that has a strong relationship with the U.S., and that is right across from the Pacific and has been providing a product that has been in high demand on the west coast—there’s a whole lot of compelling reasons why we can work closer together without the imposition of tariffs.”
Australia is the world’s sixth-largest aluminium producer, and in relation to the United States accounts for only 1 percent of steel imports, and 2 percent of aluminium imports.
Australia Accused of Flooding US Market
On Feb. 10, President Donald Trump signed a proclamation giving effect to the tariffs with the leader saying there would be “no exceptions and no exemptions.”After a phone call between Prime Minister Albanese and Trump, the president said the case for an exemption would be given “great consideration,” given the trade surplus the United States has with Australia, notably due to Australia’s regular purchases of U.S. aircraft.
However, hours later, Trump’s trade adviser Peter Navarro publicly stated he was against any exemption.
He told CNN that Australia was “killing” America’s aluminium market through its imports.
“What they do is they just flood our markets,” he said. “After Biden let them, gave them an agreement that said, ‘Don’t flood our markets. You could have a reasonable amount.’”
“That’s what we’re dealing with. Our aluminium industry is on its back.”
Further, the proclamation itself accuses Australia of not following through with a “verbal commitment to voluntarily restrain its aluminium exports to a reasonable level.”
That refers to an informal deal for an aluminium export cap supposedly agreed to by then-Prime Minister Scott Morrison, but the Australian government claims there is no written record of it.
Australia was first granted a tariff exemption in 2018 when Malcolm Turnbull was prime minister and when Trump was in his first term.
Current Australian Treasurer Jim Chalmers said the government was focused on the present, not what happened almost a decade ago.
Australia’s Industry
Last year, Australia exported 223,000 tonnes of steel to the United States, and 83,000 tonnes of aluminium.Roughly a quarter of all steel used in the United States is imported, but the bulk comes from Mexico and Canada or allies in Asia and Europe, such as Japan, South Korea, and Germany. China accounts for just 1.8 percent of total U.S. steel imports.
Aluminium imports are more significant, representing about half the total. But again, Australia is a small player. Most comes from Canada—at 3.2 million tons last year, Canadian imports were twice those of the next nine countries combined.
Nonetheless, Australia’s aluminium and steel industries—which support more than 175,000 jobs and contribute $47 billion annually to the national economy—will feel the pressure.
According to the Australian Steel Institute, BlueScope is the only Australian steel producer with substantial exports to the United States, yet it also has its own plants in the country.
There are fears that other nations, locked out of the American market, will dump cheaper product in Australia, potentially drowning out the local sector.
In Portland, on Victoria’s southwest coast, the local aluminium smelter directly employs about 600 workers and just as many contractors in a town of 10,000.
“The importance of the smelter to us, to the local economy, is just huge,” Glenelg Shire Mayor Karen Stephens told AAP. “This just throws that spanner in the works and gives that uncertainty.”
Communities in Georgetown in northern Tasmania are likely to bear the brunt of any tariffs the most, according to Mayor Greg Keiser.
Two smelters at Bell Bay, which make aluminium and manganese used in steel, are the two largest businesses in the council area.
Keiser estimates 30 percent of smelter workers live in the council’s region of 7,500 people and believes most are not confident that Australia can secure an exemption as it did in Trump’s first term.
The CEO of the peak business group in NSW’s Hunter region—home to Australia’s biggest aluminium smelter at Tomago—says the direct and indirect effects could be unclear until the tariffs were implemented.
“So a lot of uncertainty is a consequence, which is not a good thing for business or governments for that matter,” Bob Hawes told AAP.
The 25 percent tariffs on steel and aluminium come into effect on March 12, leaving Australia one month to convince President Trump and his advisors to grant an exemption for the nation’s exporters.
