Aluminium accusation threatens tariff exemption hopes
Officials hope Australia will be spared US tariffs, despite Donald Trump accusing the nation of reneging on an agreement to restrain aluminium exports.
The US’s 25 per cent tariffs on steel and aluminium imports come into effect on March 12, leaving Australia one month to win an exemption, similar to one in 2018, when Malcolm Turnbull was prime minister.
But in his proclamation signing the tariffs into effect on Tuesday (AEDT), Trump accused Australia of abusing a “verbal commitment to voluntarily restrain its aluminium exports to a reasonable level”.
That refers to an informal deal for an aluminium export cap, supposedly agreed to by Turnbull’s successor Scott Morrison in 2019. The Australian government has no written record of the commitment.
Trump’s trade adviser Peter Navarro told CNN that Australia was “killing” America’s aluminium market through its imports.
Treasurer Jim Chalmers brushed off the accusation, saying the government was focused on what’s in front of it, not what happened almost a decade ago.
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“No doubt that the colleagues will try and get to the bottom of what’s being said here,” Chalmers told ABC Radio.
After a phone call with Albanese on Tuesday, Trump said he would give Australia’s case for an exemption “great consideration”, adding it was one of the few nations with which the US had a trade surplus.
“We’re focused on this productive and positive conversation that Prime Minister Albanese had with President Trump as part of our efforts to stand up for a really important industry in this country,” Chalmers said.
In Portland, on Victoria’s south-west coast, the local aluminium smelter directly employs about 600 workers and just as many contractors in a town of 10,000.
“The importance of the smelter to us, to the local economy, is just huge,” Glenelg Shire mayor Karen Stephens said.
“This just throws that spanner in the works and gives that uncertainty.”
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Australia’s aluminium and steel industries support more than 175,000 jobs and contribute $47 billion to the national economy each year.
BlueScope is the only Australian steel producer with substantial exports to the United States, according to the Australian Steel Institute.
However, fears other nations will dump cheaper products in Australia could have a big impact on the entire local sector.
Communities in the Georgetown area of northern Tasmania are likely exposed to the tariff threat more than most, according to Mayor Greg Keiser.
Two smelters at Bell Bay, which make aluminium and manganese used in steel, are the two biggest businesses in the council area.
“Obviously, the one that we’re most concerned about would be direct employment,” Keiser said.
He estimates 30 per cent of smelter workers live in his municipality of 7500 people and believes most are apprehensive Australia can secure another exemption.
ACTU President Michele O’Neil is concerned about the impact on wages and conditions of highly skilled workers who have been at the same companies for generations.
The direct and indirect effects could be unclear until the tariffs were implemented, said Business Hunter chief executive Bob Hawes.
The peak business group in NSW’s Hunter region is home to Australia’s biggest aluminium smelter at Tomago.
“A lot of uncertainty is a consequence, which is not a good thing for business or governments for that matter,” Hawes said.
