Albanese government claims vindication after dodging Trump tariff increase

Washington/Canberra: President Donald Trump has delivered Australia the equal-lowest tariff rate of any country, with its exports to the US to continue to be hit with a 10 per cent impost, prompting the Albanese government to claim its approach had been vindicated.

Trade Minister Don Farrell vowed to continue talks until Australia is allowed to sell goods to the United States with no tariffs, as the opposition accused the government of avoiding increased tariffs on Friday through the economy’s structure rather than diplomacy.

After issuing earlier threats to hike the baseline levy to 15 or 20 per cent, Trump issued an executive order on Friday confirming new tariff rates for several trading partners following “deals” struck with their leaders, as well as revised tariffs for other countries.

Australia received the lowest rate, 10 per cent, when the so-called reciprocal tariffs were announced on April 2. Australia was not named among the changes on Friday (AEST), and a White House fact sheet confirmed any countries not on the new list would remain at 10 per cent, the same as the United Kingdom.

But some countries faced increases: Trump hiked the tariff on goods from New Zealand to 15 per cent.

White House officials indicated the administration was still open to compromise if countries removed trade barriers and came to Trump with a proposed deal. The tariffs are set to take effect in seven days.

Farrell, the trade minister, said Trump’s decision vindicated Australia’s “cool and calm” diplomatic approach to the negotiations.

“At no stage did we introduce tariffs on American goods,” Farrell said. “I haven’t seen any case or any example where the retaliatory imposition of tariffs has resulted in a country being in a better position.”

Farrell said he had invited US Commerce Secretary Howard Lutnick to Australia to negotiate further, with the government’s position being that true reciprocity would mean zero tariffs from Washington, given the existing free trade deal between the countries.

“The Americans export about double to us what we export to them,” Farrell said. “But we will continue the discussions until we get all of those tariffs removed.”

Opposition trade spokesman Kevin Hogan said Australia appeared to have been fortunate to be grouped into the group of countries that buy more goods from the US than they sell in return.

“Australia was placed in the 10 per cent group because the US runs a trade surplus with us, not because of any effort from the prime minister,” Hogan said.

Australia’s largest export industries to the US include beef and other meats, gold and pharmaceuticals.

Farrell said the decision would make many Australian products more competitive in the American market because rival goods from other nations faced higher trade penalties.

“This means products like wine, like beef, like lamb, like wheat, in a relative sense, are cheaper into the United States,” Farrell said. “And as a government, we will assist all of our exporters in ensuring that we take advantage of this situation and increase the volume of exports, not just to the United States, but to all of those other countries that we have diversified with.”

Australian Chamber and Commerce chief executive Andrew McKellar said it was good news that no other country has a lower reciprocal tariff than Australia, but argued the impost was still unjustified.

“It has to be remembered that Australia imposes no tariffs on US products,” McKellar said.

“We also have a strong trade surplus in favour of the US in terms of our two-way trade ... We will continue to work with the government and we’ll continue to prosecute the case that there should not be trade barriers between our two economies.”

There is also a legal cloud hanging over the reciprocal tariffs. In May, the Court of International Trade in New York found that they were unlawful, as Trump had exceeded his authority by imposing them using emergency laws.

The administration’s appeal was heard in Washington on Thursday (Friday AEST) before a panel of judges who expressed scepticism at times about the case presented by the government’s lawyers.

Former Australian ambassador to the US Arthur Sinodinos, now the Australia chair at The Asia Group, said the unchanged tariff rate was a pleasant surprise.

“That seems to be the baseline now for the trade surplus countries,” he said.

“It seems this administration was determined to have higher tariffs, so no one was going to get zero – that was not realistic. I think everyone will just declare victory and go home.”

Sinodinos said the main issue for Australia was the potential flow-on effects for world trade and investment as a result of Trump’s broader tariff regime, particularly with China.

“The impact could be significant globally, or it may not be,” he said. “The US economy at the moment is still chugging along fairly well, but there are some price pressures starting to emerge.”

There were some exceptions to Thursday’s announcements. China’s tariff truce with the US expires on August 12, and the Trump administration has signalled it is likely to be extended, while Mexico – the US’s largest trading partner – won a 90-day reprieve to negotiate a broader deal.

As Trump had already announced, tariffs on goods from India will be set at 25 per cent; Japan and South Korea will be 15 per cent, and Indonesia, Pakistan, Cambodia, Thailand Malaysia will all be 19 per cent.

Tariffs on South Africa are to remain at 30 per cent, the rate for Israel was adjusted to 15 per cent from 17 per cent, while tariffs on goods from Switzerland were increased from 31 per cent to 39 per cent.

Canada was slugged 35 per cent – up from 25 per cent – on all products not covered by the US-Mexico-Canada trade agreement, a move the White House linked in part to what it said was Canada’s failure to stop fentanyl smuggling.

“President Trump is using tariffs as a necessary and powerful tool to put America first after many years of unsustainable trade deficits that threaten our economy and national security,” the White House said.

Goods shipped through another country to evade a higher tariff would also be subject to a levy of 40 per cent, according to the White House fact sheet.

With AP, Bloomberg

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