Trump, Tariffs and Australia’s Trade Future
Donald Trump’s return to the White House has reignited trade tensions globally, with significant implications for the Australian economy. His renewed “America First” agenda has triggered protectionist measures, including tariffs, strategic repositioning, and policy unpredictability disrupting global markets.
Australia, situated at the intersection of major trade flows and strategic alliances, is now navigating the economic fallout of a rapidly shifting geopolitical landscape.
Global Trade Disruption
Trump’s reintroduction of sweeping tariffs has created new volatility across international supply chains. Tariffs of 25 percent have been imposed on all steel and aluminium imports, eliminating country-specific exemptions that previously shielded Australia. Comprehensive levies have also been implemented on imports from China, Canada, and Mexico, with further duties foreshadowed under a proposed system of “reciprocal” tariffs.
For Australian businesses, the immediate implications include higher input costs, disruptions to integrated global value chains, and uncertainty around contract terms with suppliers and buyers across North America and Asia. The removal of the de minimis threshold in the US, which previously allowed low-value goods to enter tariff-free, is also likely to affect Australian eCommerce businesses that ship directly to American consumers.
Strategic Relationships Under Pressure
Despite Australia’s historically strong ties to the United States, underpinned by the Australia-United States Free Trade Agreement (AUSFTA) and the AUKUS security pact, these alliances have not prevented the imposition of tariffs. Australia’s unsuccessful bid for an exemption from the steel and aluminium measures reflects a hardening of US trade posture-even towards long-standing allies.
This development highlights a more transactional and unpredictable US trade policy under Trump, where strategic alliances offer no guaranteed economic protection.
Political Repercussions in Australia
While Trump’s trade measures challenge the Albanese government, they also provide a political opportunity. The Prime Minister’s popularity has risen in recent months, buoyed by his calm, diplomatic posture in contrast to Trump’s combative style. In contrast, Opposition Leader Peter Dutton has had to distance himself from prior praise of Trump, especially as elements of his policy platform, such as cuts to public programs and reversals on diversity initiatives, are viewed as Trump-adjacent.
The Trump effect is economic and political, with ripple effects influencing domestic sentiment and shaping the policy discourse in Australia.
Risks for Australian Business
Australian companies now face several critical challenges. Businesses with operational or supply chain dependencies in the United States, China, Canada or Mexico will see rising procurement and logistics costs, particularly where inputs are caught by tariffs or rerouted through newly congested freight corridors.
Compliance requirements are also expected to increase, with heightened scrutiny around country-of-origin documentation and valuation declarations. The global shipping industry may experience further instability as trade flows adjust to tariffs, posing challenges for Australian firms reliant on reliable maritime routes. Currency volatility, driven by market responses to trade war escalation, is another risk area. The Australian dollar could see fluctuations that affect import/export competitiveness, FX exposures, and hedging strategies.
There is also a concern that Australia may become a secondary destination for surplus goods that are unable to enter the US due to higher tariffs. Such dumping practices could depress domestic pricing and lead to anti-dumping investigations and regulatory responses.
Emerging Opportunities
Despite the risks, Australian businesses may be well-placed to seize new opportunities. With US importers potentially seeking tariff-free alternatives to goods from China, Canada or Mexico, Australian-made products could become more attractive, particularly where they qualify under AUSFTA provisions. Exporters with diversified supply chains and strong compliance systems may find new market access openings. In parallel, the shifting landscape could allow Australia to press for revised trade arrangements or targeted exemptions that better reflect its strategic partnership with the United States.
Exporters can also pivot into markets previously dominated by now-tariffed competitors. The current disruption may, in effect, open up new commercial corridors for those prepared to move quickly.
Navigating the Path Forward
Australian businesses are encouraged to promptly assess their exposure and build resilience. This includes reviewing global sourcing arrangements, mapping out tariff-affected inputs, and engaging with customs professionals to explore tariff mitigation strategies. In light of shifting costs and delivery expectations, renegotiating supplier and client contracts should also be a priority. From a financial management perspective, firms should review currency hedging positions and freight contracting strategies in anticipation of continuing global volatility. Investing in trade compliance systems and digital supply chain tools will be essential to ensure efficiency and manage risk in an increasingly complex regulatory environment.
Engagement with policymakers is also important. Businesses that are materially impacted by US tariffs or global retaliatory actions should consider advocacy through industry bodies or direct representation to the government, particularly as trade diplomacy may become increasingly important in the months ahead.
Looking Ahead
The global trade environment has entered a period of renewed instability. Trump’s return to protectionist policymaking challenges established trade norms and calls businesses and investors to action. For Australia, the task is clear: understand the new rules of engagement, adapt to global shifts in supply and demand, and explore emerging openings in international markets.
Written by,
Murdoch Gatti
Private Wealth Manager | MComm Fin
Co-Author,
Anthony Adlam
Associate
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