Experts question US tariff rationale as Australian businesses push for reversal

This move prompted sharp criticism from Australian commercial organisations, which contend that the tariff hike violates the Australia–US Free Trade Agreement.

The Australian Chamber of Commerce and Industry (ACCI) labelled the US administration's rationale as groundless and pointed to a lack of evidence to back up the claims against a nation possessing some of the strongest anti-modern slavery protections globally.

Meanwhile, Shane Oliver, chief economist and head of investment strategy at AMP, said the tariffs were unjustified, and said the US administration appeared to be seeking a reason to maintain tariffs and that Australia’s strong record on modern slavery did not support the higher rate imposed.

Furthermore, the Business Council of Australia (BCA) said that increased tariffs could undermine the competitiveness of Australian exporters in the American market, threatening trade, investment, and employment.

The primary focus of Australian business groups has now turned toward whether the federal government can successfully persuade the US to rescind the tariffs.

The Australian Chamber of Commerce and Industry noted that while Australia had benefited from relatively positive treatment during negotiations, there was no valid reason for this recent hike, and the group pledged to keep backing the government's attempts to reverse the decision.

According to ACCI chief executive, Andrew McKellar, the government has spent over a year proactively consulting with US officials.

“Obviously from a business point of view, we will continue to work with the government,” McKellar said in a recent interview.

“The government has been very strong in its representations, its engagement with the US administration, with the USTR, with members of the Trump administration and cabinet throughout this process.”

“There's no justification for the decision that was made yesterday… the criteria, the basis on which it's been put forward really are ludicrous. They're just not supported by the facts,” McKellar said.

Oliver told Accounting Times that he believed the tariffs were not justified, arguing the US administration had been looking for a reason to continue imposing tariffs after previous temporary measures were due to expire.

“I think they're unjustified. The US government of the Trump administration was looking around for a reason to re-impose tariffs on countries now that the section 122 temporary tariffs of 10 per cent expired on Friday 24th so the tariffs were imposed.”

Oliver said the previous 10 per cent tariffs had applied broadly across countries, with Australia then being placed into a higher tariff category based on the forced labour claim.

“Many countries were on 10 per cent and Australia unfortunately was put on 12.5 per cent but there's no evidence that Australia has a forced labour problem.”

He said the forced labour justification did not appear to explain the difference in tariff treatment, saying countries would still face tariffs regardless of whether they met certain standards.

“I think I'm in the tariffs anyway whether you are deemed to have done anything about forced labour or not. You're still subject to a 10 per cent tariff so if you take a box we're done you still pay at 10 per cent for labour.”

The most recent tariff imposed on Australia by the US was in February, in which Australian exporters were urged to prepare documentation and systems early to claim potential refunds from invalidated US tariffs.

As a result, frequent changes in tariff policies made it harder for companies to plan, increased compliance risks, and forced exporters to reassess pricing, supply chains, and contracts to remain competitive.

The Business Council of Australia cautioned that the recent implementation of these higher tariffs lacks any evidential justification.

It warned that this move could harm trade, investment, and jobs by undermining the ability of local firms to compete in the American market.

In response, corporate leaders have turned their attention toward advocating for the removal of these tariffs while working to diminish their impact on domestic operations.

In a statement, BCA chief executive, Bran Black, said: "We are disappointed by the decision of the United States to impose a new 12.5 per cent tariff on Australian goods, up from 10 per cent, penalising Australian businesses for no justifiable reason."

Black said the BCA would continue working with governments on both sides of the Pacific to reduce the impact on Australian exporters.

"We will continue to work with the Australian Government and officials in Washington D.C. to minimise the impact on Australian businesses."