The Times Australia
The Times World News

.

Trump’s steel tariffs are unlikely to have a big impact on Australia. But we could be hurt by what happens globally

  • Written by Scott French, Senior Lecturer in Economics, UNSW Sydney

Just one day after the US Court of Appeals temporarily reinstated[1] the Trump Administration’s Liberation Day tariffs[2] of between 10% and 50% on nearly every country in the world, Trump announced[3] tariffs on all US imports of steel and aluminium will increase from 25% to 50%.

He told the rally of steel workers in Pennsylvania the increase would come into effect Wednesday US time.

Trump said the increase “will even further secure the steel industry in the United States.” But Australia’s trade and tourism minister, Don Farrell, called them “unjustified and not the act of a friend” and “an act of economic self-harm that will only hurt consumers and businesses who rely on free and fair trade.”

There was hope Australia would obtain an exemption[4] from the original tariffs introduced in February. But it now seems clear Trump is intent on applying the tariffs across the board. And, unlike the Liberation Day tariffs, these are unlikely to face significant legal challenges.

So, how will the steel tariffs affect Australians? To understand this, it is important to understand how it will affect the US and its other trading partners.

The direct effect will be small

As with the original 25% tariffs[5], the direct effect on Australian steel and aluminium producers will not be profound.

Only about 10% of Australia’s steel and aluminium exports, and less than 1% of its overall production, goes to the US. Australia’s own BlueScope Steel’s North Star mill in Ohio is actually set to benefit[6] from the tariffs.

But most Australians will feel the effects of the tariffs through the indirect effects on US manufacturing and America’s trading partners.

Impact on the US

We know a lot about how US manufacturing will be affected because this has all happened before. In 2002, George W. Bush imposed tariffs of 8%-30%[7] on steel products, before withdrawing them less than two years later. And Trump imposed tariffs of 25% on steel and 10% on aluminium in his first term.

Research has shown the tariffs did slightly increase[8] US metal production but at great cost. In addition to increasing prices for US consumers, as tariffs typically do[9], the Bush steel tariffs reduced overall employment, as manufacturers that use steel as an input laid off workers or went out of business[10].

Further, while these tariffs were only in place for a short time, the affected US industries took years to recover[11], and many never have.

The same thing happened with the tariffs from Trump’s first term, where any gains in steel and aluminium production were more than offset[12] by losses in metal-consuming industries.

For Australians, this means many products we buy from the US are going to get more expensive. This includes vehicles and aircraft as well as machinery and medical equipment used by Australian producers. And if the past is a guide, many products will simply become unavailable.

Effects on trading partners

While Australia does not export large amounts of steel and aluminium to US, other countries do. The higher tariffs will further depress the Canadian and Mexican metals industries, which can affect Australian industry in several ways.

First, if North American consumers are buying less of everything, that reduces demand for Australia’s exports, both directly and indirectly as the reduced spending makes is way down the supply chain.

Large rolls of sheet steel in a warehous
Australia exports very little steel to the US so is less likely to be hurt by the direct impact of the tariffs. IndustryViews/Shutterstock[13]

Second, the affected metals manufacturers will look for other markets for their products. Canada is not likely to flood Australia with cheap aluminium, but it may, for example, displace some of our exports to South Korea. And this is happening as the OECD is warning[14] of excess steel capacity, driven in part by China’s outsized steel subsidies.

But this is not all bad news for Australians. While local steel and aluminium producers will suffer from the diversion of supply from the US, a temporary fall in prices would offer some relief after the post-pandemic rise in building and infrastructure costs[15].

Retaliatory tariffs

On top of all these effects are the effects of retaliatory tariffs by other countries, as the EU has already threatened[16]. Like the US tariffs, these tariffs will make consumers on both sides poorer, reducing demand for Australian exports. But they will open new markets as well. For example, China’s retaliatory tariffs on US almonds have caused a boom in Australian exports.

The big question for Australia is how this will affect the price of iron ore, by far our largest export. So far, we have not seen major price swings[17]. But if the latest salvo in Trump’s trade war causes the global economy to slow significantly, or if China backs off its steel subsidies, this could change.

State of uncertainty

And perhaps the most significant impact of the latest change in US tariff policy is the effect of ongoing uncertainty over US and global trade policy. Trade policy uncertainty reduces international trade flows[18] and chills business investment.

Whether a business is considering a venture dependent on an input that will be affected by tariffs or, like BlueScope’s Ohio steel mill, might stand to benefit from US tariffs, the uncertainty over what the policy will be tomorrow, let alone five years from now, will make any company hesitant to commit major funds.

A case in point is Whyalla Steelworks, which has received a $2.4 billion rescue package[19] and is currently in administration and seeking a buyer[20].

With Donald Trump able to upend the global steel industry again at any moment, buyers will be thinking twice before investing billions of dollars, which is bad news for nearly everyone, not least of which the residents of Whyalla, who await the fate of a major local employer.

References

  1. ^ temporarily reinstated (www.abc.net.au)
  2. ^ Liberation Day tariffs (theconversation.com)
  3. ^ Trump announced (www.abc.net.au)
  4. ^ exemption (theconversation.com)
  5. ^ As with the original 25% tariffs (theconversation.com)
  6. ^ benefit (www.abc.net.au)
  7. ^ George W. Bush imposed tariffs of 8%-30% (theconversation.com)
  8. ^ slightly increase (papers.ssrn.com)
  9. ^ as tariffs typically do (theconversation.com)
  10. ^ laid off workers or went out of business (papers.ssrn.com)
  11. ^ took years to recover (economics.yale.edu)
  12. ^ more than offset (papers.ssrn.com)
  13. ^ IndustryViews/Shutterstock (www.shutterstock.com)
  14. ^ OECD is warning (www.oecd.org)
  15. ^ rise in building and infrastructure costs (www.abs.gov.au)
  16. ^ EU has already threatened (www.afr.com)
  17. ^ we have not seen major price swings (www.afr.com)
  18. ^ reduces international trade flows (theconversation.com)
  19. ^ $2.4 billion rescue package (www.abc.net.au)
  20. ^ currently in administration and seeking a buyer (www.afr.com)

Read more https://theconversation.com/trumps-steel-tariffs-are-unlikely-to-have-a-big-impact-on-australia-but-we-could-be-hurt-by-what-happens-globally-257959

Times Magazine

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Times Features

The Role of Your GP in Creating a Chronic Disease Management Plan That Works

Living with a long-term condition, whether that is diabetes, asthma, arthritis or heart disease, means making hundreds of small decisions every day. You plan your diet against m...

Troubleshooting Flickering Lights: A Comprehensive Guide for Homeowners

Image by rawpixel.com on Freepik Effectively addressing flickering lights in your home is more than just a matter of convenience; it's a pivotal aspect of both home safety and en...

My shins hurt after running. Could it be shin splints?

If you’ve started running for the first time, started again after a break, or your workout is more intense, you might have felt it. A dull, nagging ache down your shins after...

Metal Roof Replacement Cost Per Square Metre in 2025: A Comprehensive Guide for Australian Homeowners

In recent years, the trend of installing metal roofs has surged across Australia. With their reputation for being both robust and visually appealing, it's easy to understand thei...

Why You’re Always Adjusting Your Bra — and What to Do Instead

Image by freepik It starts with a gentle tug, then a subtle shift, and before you know it, you're adjusting your bra again — in the middle of work, at dinner, even on the couch. I...

How to Tell If Your Eyes Are Working Harder Than They Should Be

Image by freepik Most of us take our vision for granted—until it starts to let us down. Whether it's squinting at your phone, rubbing your eyes at the end of the day, or feeling ...