The US president claims the measures are “reciprocal”, with a chart unveiled by the White House saying Australia charges 10 per cent tariffs on American goods even though there’s a free trade agreement between the two countries.
So what is Trump actually retaliating against? This is what you need to know.
Does Australia impose tariffs on US goods?
Despite what Trump’s chart might have you believe, Australia doesn’t impose any tariffs on imports from the US due to a free trade agreement signed between the two countries in 2005.
Prime Minister Anthony Albanese made this point after Trump’s announcement.
“President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero – not 10 per cent,” he said.
Indeed, the current Australian government has generally been opposed to import duties; it removed the best part of 500 so-called “nuisance” tariffs last July, and didn’t impose retaliatory measures to Trump’s taxes on steel and aluminium earlier this year.
What is Trump retaliating against then?
There’s a bit of telling fine print in Trump’s chart. Under “Tariffs charged to the USA”, it adds “Including currency manipulation and trade barriers”.
“The framing is problematic – they are reciprocal in the face of perceived ‘unfairness’ to the US rather than specific economic harms,” Monash Business School’s Dr Nicola Charwat said.
“It appears that Trump or the United States can redefine any trade policy difference as unfairness and reach for tariffs. This gives rise to a high level of uncertainty.”
It’s a bit of an arbitrary calculation, but the “currency manipulation and trade barriers” is likely how the White House has come up with its 10 per cent figure for Australia, although it could also be a reference to the GST – the 10 per cent sales tax on all goods and services, imports or otherwise.
The main trade barrier it’s referring to in Australia’s case is the strict biosecurity controls preventing the import of raw beef from many countries – of which the US is just one.
This was singled out by Trump in his announcement.
”Australia bans – and they’re wonderful people, and wonderful everything – but they ban American beef,” he said.
“Yet we imported $US3 billion of Australian beef from them just last year alone.
“They won’t take any of our beef.
“They don’t want it because they don’t want it to affect their farmers and you know, I don’t blame them but we’re doing the same thing right now starting at midnight tonight, I would say.”
Australia does accept raw beef from some countries, like Japan, and US imports were only banned in 2003 due to concerns about the deadly and incurable Mad Cow Disease in American cattle.
In a report released earlier this week by the Office of the US Trade Representative (USTR) – which has since been removed from the USTR’s website – several other trade issues with Australia were noted.
These included similar bans on importing uncooked pork and poultry, as well as apples and pears, the news bargaining code made mandatory last year, and Australia’s pharmaceutical industry.
US pharmaceutical companies have long taken issue with Australia’s Pharmaceutical Benefits Scheme, however it appears pharmaceutical products have been exempted from today’s new tariffs.
Are other countries in the same boat?
Australia is far from the only country to be hit by “reciprocal” tariffs far higher than what it poses on the US.
New Zealand has also taken issue with Trump’s logic.
Trade Minister Todd McClay rejected the 20 per cent figure on the chart about the tariffs New Zealand imposes and said he had asked his country’s officials to clarify it.
The full list of Trump’s ‘reciprocal’ tariffs
“We don’t have a 20 per cent tariff rate,” he said, adding that New Zealand was “a very low tariff regime” and the correct figure was below the 10 per cent baseline rate applied to all countries.
As another example, Israel, which is listed at 33 per cent on the White House chart, announced it was cancelling all remaining tariffs on the US earlier this week.
Switzerland also made its case to Trump earlier late last month, with Economic Affairs Minister Guy Parmelin saying “we have abolished industrial tariffs”.
“That means almost 99 per cent of goods from the US that come to Switzerland do so without customs duties. Probably other countries don’t have that.”
The White House, though, claimed Switzerland imposes 61 per cent tariffs on US goods, and slapped a 31 per cent rate on it in return.
– With Associated Press
