Australia warned not to hit back at US with tariffs
Australia should not impose retaliatory trade restrictions on the United States, the head of treasury has warned, after Treasurer Jim Chalmers met with American counterparts to make his case for a tariff exemption.
It came after Chalmers spoke face-to-face for the first time with US counterpart Scott Bessent in Washington, alongside President Donald Trump’s top economist, Kevin Hassett, for talks on duties on steel and aluminium imports.
Chalmers said the hour-long breakfast meeting, held at ambassador Kevin Rudd’s official residence, was “wide-ranging, positive and productive”, but “at the end of the day, this will be President Trump’s call”.
“My task here in DC wasn’t to try to conclude that discussion, it was to try to inform it,” he said.
“It’s clear to us before the meeting, during the meeting, and after the meeting, that this call will be made by President Trump.”
Chalmers said Australia had a different case to make than other nations who had also been targeted by US tariffs.
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“The Americans run a very substantial trade surplus with Australia,” he said.
“We don’t manipulate our currency.
“Our products are often an input into domestic production here.”
Australia has just a few weeks to secure a reprieve from Trump, with the 25 per cent tariff on the metals imported into the US due to come into effect by mid-March.
Australia’s treasury secretary, Steven Kennedy, said if the government did not secure an exemption, it should not respond by striking back with more trade restrictions.
“For a medium-sized economy such as Australia, there is overwhelming evidence that the use of trade restrictions imposes costs on our consumers and businesses,” he told a Senate estimates hearing on Wednesday.
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“If Australia were to impose tariffs, we would bear nearly all the cost, given our size and inability to affect the world prices of the goods we import.”
Australia already showed how to respond successfully to trade tensions when China imposed restrictions on exports such as barley, coal and wine during the pandemic, he said.
“It will seem counterintuitive to many, but responding to tariffs or trade restrictions with similar measures will only make matters worse,” Kennedy said.
“Producers in the targeted industries were adversely affected.
“But governments did not compound the economic costs by implementing retaliatory tariffs or barriers that would have harmed Australian consumers and businesses, and in many cases, our exporters found alternative markets.”
Asked about Australia’s request, Bessent said, “So far, so good. But I’m not USTR (United States Trade Representative)”.
Trade Minister Don Farrell has not met his soon-to-be US counterpart Jamieson Greer, who is yet to be confirmed in his role.
But there have been less welcoming noises coming out of the Trump camp, with trade adviser Peter Navarro accusing Australia of breaking a promise about limiting aluminium exports to the US and criticising its social media levy on US tech giants.
Asked if reports that Australia had exceeded a voluntary commitment not to export beyond a certain level of aluminium were brought up, Chalmers said no.
He reiterated the strong economic ties between the two nations in a speech to US business leaders and Australian superannuation companies.
He called for more cooperation between the economies, saying Australia’s $4.1 trillion pool of superannuation capital could be deployed in the US to help develop infrastructure projects such as toll roads and container terminals.
Trump has said he is considering Australia’s request for an exemption, as the Albanese government argues a trade surplus enjoyed by the US should spare the nation’s exports.
– with AAP
