US-China Tariff War May Negatively Impact Australia
by Tara Kennedy
Australian Catholic University Associate Professor Tom Barnes says Prime Minister Anthony Albanese may be able to “negotiate some special favours” with the United States to avoid being included in the latest round of tariffs announced by United States President Donald Trump.
The tariff war began after Trump first issued a 10 per cent tariff on all goods imported from China effective 4 February, with China issuing counter-tariffs which came into effect 10 February.
He also announced tariffs of 25 per cent against US neighbours Canada and Mexico, but he has given each nation 30 days’ grace provided they increase border patrol.
Australia has now seen consequences after it was announced there would be a 25 per cent tariff on all imports of steel and aluminium into the US.
Concerns
Professor Barnes, the director of the Sociology program within the Institute for Humanities and Social Sciences at ACU, said industrial policy containing strategic tariffs has “undergone a resurgence in recent years” independent of Trump’s use of them.
“Tariffs can be used in a rational way that is not damaging and doesn’t have all negative consequences economically,” he told The Catholic Weekly.
“It can be used if it’s part of a rational plan to raise sort of national wealth, and to increase kind of general prosperity of populations within countries.”
There are concerns, however, the new US tariffs are not being levied due to the reasons stated, and Professor Barnes says there are likely to be “negative consequences”.
In the document provided by the White House, the reasons given for the initial tariffs on China, Canada, and Mexico are due to the “extraordinary threat posed by illegal aliens and drugs”, with fentanyl being listed as a narcotic of concern.
The document, titled “Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China”, says the nations’ role in drug production has constituted a “national emergency” for the United States.
Negotiations
Campion College Australia’s Dr Stephen Chavura says while the tariff strategy is yet to be fully revealed, it is likely it will target nations Trump “feels have had a historically asymmetric trade relationship with America.”
“Trump tends not to describe it as a blanket imposition of tariffs on all countries, but some Australian exports may be caught in the net, in which case Australia will have to try to negotiate a deal with Trump,” Dr Chavura told The Catholic Weekly.
Even before the announcement on the tariffs on metal imports, there were fears of impacts on Australia, already experiencing a cost-of-living crisis, and the strength of the Australian dollar.
Barnes says this need not be a bad thing as manufacturers and exporters will benefit from a weakened dollar, as will those who work in these industries.
“If the Federal Government can use some arrangements to free trade agreements to benefit local exporters, that has a positive impact for jobs,” he said.
Barnes said the weak dollar, while good for these industries, will likely drive inflation and rates up further.
“That’s not good for cost-of-living standards in Australia, it’s not good if the Reserve Bank decides to keep interest rates higher for longer,” he said.
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Republished with thanks to The Catholic Weekly.
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