Trade minister touts relative advantage after Australia spared of US tariff hikes
Australia’s US tariff rate has remained steady at 10 per cent, leaving it in a position of relative advantage compared to other exporters, Trade Minister Don Farrell has said.
On Friday (AEST), US President Donald Trump signed an executive order declaring fresh tariff rates, hours before the 1 August expiry of ‘Liberation Day’ tariff pauses, which saw most tariffs pared back to 10 per cent. The updated rates will take effect from 7 August.
Australia’s 10 per cent tariff rate didn’t budge, allaying fears that Trump would hike the baseline rate to 15 or 20 per cent, a move he said he was considering at a July press conference.
Trade Minister Don Farrell argued that Australia’s relatively low US tariff rate placed it at an advantage over other exporters, a position it would seek to exploit.
"As a government, we will assist all of our exporters in ensuring we take advantage of this situation and increase the volume of exports, not just to the US, but all of those other countries that we have diversified with," Minister Farrell told reporters.
"I think this is a vindication for the Albanese government and particularly the prime minister in the cool and calm way we have conducted diplomacy with the United States.
The US executive order classified countries into two categories: ‘Annex II’ countries, which would receive the baseline 10 per cent rate, and ‘Annex I’ countries, which would be subject to a specified tariff rate.
Australia belonged to the former category. Tariff rates for the latter group ranged from 10 per cent to 41 per cent, with the highest-tariffed nations including Syria (41 per cent), Myanmar (40 per cent) and Laos (40 per cent).
The Trump administration has forged ahead with its tariff hikes despite facing legal challenges after a US trade court determined that Trump’s use of emergency powers to impose the tariffs had been unauthorised under US law.
On Friday (AEST), the U.S. Court of Appeals for the Federal Circuit grilled the administration’s use of a 1977 law, historically used for sanctioning enemies during emergencies, to impose sweeping tariffs at Trump’s whim.
The Trump administration had argued that the ‘Liberation Day’ tariffs had been necessary to address the “national emergency” of its budget deficit, but judges were sceptical.
"IEEPA doesn't even say tariffs, doesn't even mention them," Judge Jimmie Reyna said.
The tariffs will remain in place while the litigation continues.
US share markets also fell on Thursday on trade concerns ahead of the August 1 tariff deadline, Commonwealth Bank economists said.
The Trump administration appeared unfazed by legal challenges and stock market turbulence, declaring that its tariffs were revitalising American manufacturing industries.
“By imposing tariffs on countries with nonreciprocal trade practices, President Trump is incentivising manufacturing on American soil and defending our industries,” the White House said.
“With billions in reshoring investments already announced, President Trump is bringing manufacturing jobs back to America, revitalizing communities, and strengthening supply chains.”
Minister Farrell said that Australia would continue to lobby the US for the removal of its 10 per cent tariff rate.
“We believe in free and fair trade, and we will continue to put the argument to the US that they should remove all tariffs on Australian products in accordance with our free trade agreement, and we will continue to prosecute that argument,” he said.
