Briefing Paper on US tariffs.
Written on 23/05/2025
Executive summary.
Policy regarding international relations and trade is one of the most important considerations for the current Australian government, with its significance being a byproduct of the rapid evolution of globalisation throughout the world. Throughout 2025 a regularly discussed policy issue for many countries has been how they might effectively respond to recently introduced tariffs from the United States. Currently, the US has implemented a 10% baseline tariff on most of the goods that they import. Some goods that Australia exports to the US are exempt from these tariffs until July, some (such as steel and aluminium) are subject to higher tariff rates. (DFAT, 2025.) The tariffs, particularly the ones imposed on agricultural industries such as beef and lamb, are a point of concern for several Australian industries and the government. The government has announced that they are, “working to analyse the impacts of these announced US trade measures on Australian trade,” and that the impacts of the tariffs will vary for different sectors of Australian industry. (DFAT, 2025.) The variation in impact is partially because, “some strategic sectors such as aluminium, steel, and automotive products continue to attract 25% tariffs under section 232 of the Trade Expansion Act.” (Allen, 2025.) An effective policy approach to Trumps’ tariffs must consider the different rates of different tariffs, but also which Australian exports to the US are the largest. Although the 25% tariff on steel and aluminium seems like it should be the top priority within any new policy toward the tariffs, sectors such as beef and lamb, “dwarf the sales of Australian-made steel and aluminium to the US.” (Tillet, 2025.) This means that these sectors should be the top priority of policymakers as it pertains to the tariffs. An effective policy approach must factor local economic implications, international trade implications, and the importance of Australia's relationship with America. It must also consider any previous declarations and policy made by the Australian government and other powerful Australian institutions regarding the issue. For policy regarding these tariffs to be effective, it must focus on the direct impacts that Trump’s tariffs have on Australia, whilst also considering the impact that they are having on the global economy and how that in turn can also impact Australia. This proposed policy will be effective through its proposition of riding the trade diversions created by America’s tariffs on other countries toward alternative trade options for exports, and its focus on maintaining a peaceful, mutually beneficial relationship with The United States.
Purpose.
The heightened purpose of creating policy regarding the US tariffs is founded on the fact that, “trade is a major part of the Australian economy, accounting for much as 45 per cent of GDP.” (Stone, 2025, P. 53.) Although it is vital that foreign affairs policy is made to ensure that international relations are maintained, the importance of policy made in response to Trump's tariffs is exemplified by the necessity to prioritise the Australian economy. Creating effective, carefully considered policy in response to the actions of the Trump administration is also framed by the unpredictable nature of Donald Trump as both an ally of Australia and a policymaker who prioritises Americanism over globalism. Currently, the higher “reciprocal” tariffs on steel and aluminium are suspended, as Trump announced that all countries that didn’t retaliate against his recent policies would be exempt from these increased tariffs until July. (BBC, 2025.) Furthermore, Australia and the US are involved in several connected international efforts such as AUKUS. It is imperative to consider Australian policy toward the US with a great degree of care, as it can be argued that much of the current relations between the two countries - which include Australia increasing financial assistance to the American nuclear-powered submarine industry, a greater American military presence on Australian soil, and the broader implications that these dynamics have in relation to China - are indicative of, “Trump’s transactional impulse when it comes to alliances.” (Curran, 2025, P. 8.) Furthermore, the issue of responding to Trump’s tariffs is an extremely important economic consideration for all nations. It can be argued that although the direct impact of the tariffs on Australia’s economy may not be significant, the flow on effect of Australian trade partners that are being hit by tariffs (such as China and Canada) retaliating may be even more detrimental to the Australian economy. A recent OECD study suggested, “Australia could lose close to 1.2 per cent of GDP if there was a 10 per cent reduction in global trade.” (Stone, 2025, P. 54.) This context further proves that this is an issue of significant importance, as the quality of Australia’s response to these tariffs will bear relevance to the national economy and the nation’s standings among other states.
Critical analysis.
Prime Minister Anthony Albanese has introduced an effective five-point plan in response to the tariffs. In an official announcement, Albanese stated that Australia would continue to try to get an exemption from the tariffs but would also roll out other means of response. This plan includes 50 million AUD being spread across sectors affected most by the tariffs, five overseas missions to scope out new markets for the industries impacted by the tariffs, a strategic reserve for Australian critical minerals, and a focus on putting Australian businesses first in a new policy that focuses on assisting the Australian economy through incentivising locals to buy from Australian businesses. (Grattan, 2025.)
Out of the 14.73 billion USD worth of exports Australia sent to the US, 4 billion USD of it was meat, making this Australia’s top export to the US by some margin. (Deane, 2025.) This is on course with recent history, as beef exports alone have grown from 17% in 2020 to 23% of Australia’s total exports to the US in 2023. (Stone, 2025, P.52.) From Australia’s perspective, it is easy to see why this is a point of focus considering the tariffs, yet policy regarding beef exports between Australia and America has also been a point of contention for the Trump administration. In the most recent trade report released by the US, Australia’s biosecurity restrictions on meat, apples and pears were identified as a “foreign trade barrier”. (Deane, 2025.) This was directly referenced by Trump, who used the fact that “they won’t take any of our beef” as justification for the 10% tariff on Australian beef. Chris Parker, the chief executive of one of the top Australian agricultural lobby groups, Cattle Australia, has stated that the group was, “extremely concerned by Trump’s protectionist comments on potentially imposing agricultural tariffs.” (Tillet, 2025.) Furthermore, Parker stated that, “any new initiative that is a barrier to international trade is something that we will vigorously oppose on behalf of Australia’s beef producers.” (Parker, as cited in Tillet, 2025.)
Reaching a compromise with the Trump administration regarding any of these tariffs (let alone the one on beef) will be difficult due to the America first justification behind Trump’s policy. Thus, it is important to consider Australia's standings in the global economy to find alternate options for trade. Currently, Australia has several free trade agreements that are absent of any barriers of entry for trade. These include agreements with countries such as China, Japan, South Korea, Malaysia, India and the U.K. (DFAT, 2025.) In recent history the US has been a significant competitor with Australia in exporting beef to nations such as Korea and Japan. (Wong, 2022, P.73.) However, with the Trump administration's aggressive Tariffs upon these nations, both are currently in the negotiating stage with the US as to what their plans will be for future trade. (Tompkins, 2025.) This negotiation is also relevant in the case of steel and aluminium - an industry particularly impacted by the tariffs in both Australia and Japan. A strength of Australia’s current geo-political situation is the pre-existing trade relationships with other nations impacted by the tariffs such as Japan and Korea. Assuming that Albanese’s plan to discuss trade options with other countries goes forward, it is imperative to keep a close eye on countries that are in a negotiation stage with America, as there is a chance that they will be in the market for a new exporter of products such as beef and lamb if they decide to retaliate against The United States. Furthermore, Australia has already “filled the gap” after America’s 2.5 billion USD export of beef to China recently came to a halt due to trade conflict between the two nations. (Brann, 2025) This further illustrates the strength of Australia’s trade partners within the global scene, as the more of these nations that are likely to decrease trade with the US, the higher the chance of an increase in demand for Australian products.
A challenge that Australian policy-makers face when making any reactionary policy to American actions is that regardless of how negatively American policy impacts Australia, the two countries are bound to a degree in which an Australian response that could be perceived as aggressive is not worth pursuing. Because Australia is not a global superpower, “allying with great powers has become a necessity to ensure its security.” (Rees, 2025, P. 91.) Furthermore, the recent AUKUS collaboration between the two nations can (from Australia’s end) be understood to be born in the idea that, “recent anxiety brought by about by a shift in the regional balance of power through China’s rise, uncertainty concerning the US’s willingness to remain engaged in the region, and concerns over the rise of nativist preferences in the US leading to their questioning of the value of long-standing alliances serves as a threat to Australia’s identity.” (Rees, 2025, P. 92.) Australia’s contemporary dynamic with the US has been a point of criticism, with some asserting that, “Australia’s status as an ally of the US, and by extension a defender of the US-led international order, along with their fundamental ‘fear of abandonment’ have become deeply ingrained aspects of Australia’s ‘Self Identity’.” (Rees, 2025, P. 92.) Regardless of whether it is good or bad, the existence of this dynamic makes it difficult for Australian policymakers to justify reacting to the tariffs in any meaningfully aggressive way. This negates the possibility of introducing retaliatory tariffs against American products (an option Albanese has already dismissed) and makes the option of entirely abandoning the US as a trade partner unfeasible.
Albanese’s five-point plan in response to the tariffs is effective in addressing many of the internal economic considerations of different Australian industries. The critical minerals reserve, prioritisation of Australian businesses and $50 million AUD assistance to impacted industries are all policies that will help the Australian economy recover from the impact of the tariffs. Albanese has also announced a “$1 billion economic resilience program.” (Dick, 2025.) This program, which is still being finalised, is set to, “provide $1 billion in zero interest loans for firms to take advantage of new markets and export opportunities.” (Dick, 2025.) While this is another excellent measure in maintaining the trade reliant Australian economy, further specification could be made as to which industries will receive this assistance. Some Australian industries have not been impacted nearly as badly by the tariffs as others, and thus for this measure to maximise its positive impact, it should be directed primarily toward agriculture industries such as beef and lamb, along with industries impacted by the 25% tariffs such as steel and aluminium.
Recommendations.
Having analysed the nature and context of the tariff issue, along with the responses from both government and nongovernment bodies throughout Australia, it is now possible to make a list of practical actions that can be made soon. This list will revolve around the five-point plan that Albanese has recently announced, looking to both fill out and specify aspects of the plan. Although not following a dated timeline, the order of the list reflects the order in which these events should take place.
Initiate the five-point plan by releasing $50 million AUD subsidy. The money will be dispersed proportionally to different industries depending on the damage the tariffs have inflicted upon the industries stability and the amount of money the industries generated through US exports. The largest recipients of the subsidy will be the beef industry, the lamb industry, the automotive products industry, the steel industry and the aluminium industry.
Approach nations that Australia has pre-existing trade agreements with that are currently in the negotiating stage of economic discourse with the Trump administration - South Korea, Japan, the UK - and look to bargain an increase in exports of beef, lamb, steel and aluminium.
Approach nations that Australia has pre-existing trade agreements with that are currently retaliating against the Trump tariffs - China, states in the EU, Canada - and look to bargain an increase in exports of beef, lamb, steel and aluminium.
Establish the $1 billion AUD economic resilience program and encourage businesses to capitalise on new markets.
Establish critical mineral reserve and begin the rollout of “Buy Australia” campaign.
Throughout this process, Australia will maintain agreements such as AUKUS and to a certain extent continue to value the US as a trade partner. For such a plan to be effective, Australia cannot completely turn its back on the US, however in order to remove the fear of abandonment that has stricken the Australian psyche and led to the county to be reliant on world leaders that do not always share Australian interests, policy-makers must look to introduce programs that allow for Australia to maintain fair, profitable trade throughout the global scene, whilst also boosting the economic sanctity of Australian industries.
Bibliography.
References
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