Trump’s tariffs after the US midterms: What changes for Australia and AUKUS?

Democrats have won both houses of Congress, giving them the power to challenge Donald Trump’s trade agenda. Australian exporters still face a 12.5 per cent tariff on many goods, while the AUKUS submarine program reaches a milestone in Western Australia.

In the same week that American voters took Congress away from Donald Trump’s Republicans, a US nuclear-powered submarine arrived at HMAS Stirling in Western Australia for maintenance. The USS Colorado is due back in late 2027 as the first American submarine assigned to a new rotational force under AUKUS. Meanwhile, many Australian goods entering the United States still face an additional tariff of 12.5 per cent.

For Australia, those developments tell us more about the next two years than the election result alone. Washington wants Australian shipyards and personnel to help sustain its submarines in the Indo-Pacific. It is also willing to make it more expensive for American businesses to buy Australian goods. Canberra has to deal with both policies at once.

Can the Democrats unwind Trump’s tariffs?

The Democrats’ victories in the House and Senate give them a stronger hand when the new Congress takes office in January. They can hold hearings, demand answers from officials, bring tariff bills to a vote and use negotiations over government spending to seek concessions. Cost-of-living pressure helped drive the election result, and Senate Democrats were already campaigning against what they called Trump’s tariff tax.

Trump retains the veto. Overriding it requires a two-thirds vote in each chamber, so any substantial rollback over his objection would need significant Republican support. The administration also retains tariff powers under laws Congress previously enacted. For Australian exporters quoting on a shipment today, the rate on the US customs schedule matters more than the new balance of power on Capitol Hill.

What Australia is paying for

Since 24 July, many Australian goods entering the US have faced an additional 12.5 per cent duty under Section 301. Washington imposed the measure after finding that Australia and dozens of other economies had failed to effectively bar imports made with forced labour. Product exemptions apply. Separate US national-security tariffs cover selected goods, with rates of 10 to 50 per cent on covered steel, aluminium and certain copper products and derivatives, depending on the item. The charge on any shipment depends on its customs classification and the rules that apply to it.

The US importer generally pays the duty at the border. The cost can then work its way back to Australia. An American distributor might ask an Australian supplier for a discount, raise its own prices or find another source. An exporter with a specialist product and few competitors may be able to hold its price. A business selling something its customer can buy from several countries has less room to bargain, especially if a competing supplier faces a lower tariff.

For Australian households, the immediate effect is less direct. The US tariff is charged on goods entering America. The Australian impact comes through decisions about orders, margins and investment. In an export town, it may show up first in a processor receiving a smaller order or a manufacturer deferring an extra shift.

The two countries’ free trade agreement has been in force since 2005. In 2025, Australia sold about A$60 billion in goods and services to the US and bought more than A$98 billion in return. Those figures include services, while the duties apply to goods. They help explain why Canberra regards the trading relationship as valuable and why a US surplus has offered Australia little protection from tariffs imposed on broader grounds.

What does Washington want from trade now?

Trump’s approach uses tariffs to protect selected industries and extract concessions from trading partners. His administration has applied them on national-security grounds and over other countries’ import rules. For Australia, that means market access can hinge on an American decision about steel production or forced-labour regulation, even when the two countries already have a free trade agreement.

Democrats have an opening to challenge the breadth of those tariffs and the president’s ability to impose them. Their immediate political argument is about what Americans pay at the checkout and what US businesses pay for imported supplies. That leaves room for a fight over broad duties while tariffs aimed at particular industries remain in place. For Canberra, the most promising case for relief may be where Australian suppliers and their American customers can show that a particular duty is costing both sides business.

AUKUS has a different test

AUKUS began under Democratic president Joe Biden and has continued under Trump. The Colorado’s visit is part of the work already under way. Australian personnel are maintaining an operational Virginia-class submarine alongside US and British counterparts at HMAS Stirling. The planned rotations from late 2027 will give Australia more experience sustaining the sort of boats it intends to operate itself.

The harder milestone is the planned purchase of US Virginia-class submarines in the early 2030s. US law requires the president to certify to Congress before a transfer that it will preserve America’s undersea capability, among other conditions. That puts the capacity of American shipyards and maintenance facilities at the centre of Australia’s timetable. A Democratic Congress can shape shipbuilding budgets and scrutinise progress. The practical question is whether the United States can build and maintain enough submarines for its own navy to release boats to Australia.

The Times View

The first test of the new Congress for Australia will be whether scrutiny of Trump’s tariffs produces relief that an exporter can see on a customs entry. The test for AUKUS will be whether the work at HMAS Stirling is matched by enough shipbuilding and maintenance capacity in the United States to make the first Australian purchase possible. Those are the outcomes Canberra can measure as Washington settles into divided government.