A significant shift in Australia-US trade relations is on the cards following President Donald Trump’s announcement to impose 25% tariffs on Australia’s steel and aluminium exports.
Speaking to reporters aboard Air Force One, Trump confirmed the tariffs would apply to metal imports from all countries but did not specify when the levy would take effect.
While the news has sent markets down, it is unlikely to materially impact Australia’s iron ore exports, which are a critical component in steelmaking: China accounts for about 85% of Australia’s iron ore exports and less than 1% of the country’s direct steel exports are shipped to the US.
According to the UN COMTRADE database, the US imported approximately A$638 million (US$400 million) worth of Australian steel and A$439 million (US$275 million) in aluminium in 2024.
Also potentially working in the country’s favour is that during Trump’s first administration, Australia was among several trade partners — including Canada, Mexico, the European Union and the United Kingdom (TADAWUL:4280) — granted exemptions from US steel and aluminium tariffs, which stood at 25% and 10%, respectively.
AUKUS ramifications
The trade restrictions could have implications for the AUKUS defence partnership, as Australian company Bisalloy Steel was named last year as a supplier to US submarine manufacturer Newport News Shipbuilding. Bisalloy has received an initial purchase order, with its steel earmarked for testing and training purposes.
Bisalloy, Australia’s only manufacturer of high-tensile and abrasion-resistant quenched and tempered steel plates used by various industries including defence, was down 5% to $3.57 in morning trading.
Potential AUKUS suppliers may also suffer market hits.
Australian political leaders are banking on the country’s defence alliance with the United States to secure an exemption from the broad trade tariffs.
Opposition trade spokesman Kevin Hogan emphasised the importance of securing an exemption, stating that the Prime Minister and Australia’s Ambassador to the US, Kevin Rudd, must prioritise negotiations to protect Australian industry.
“When we were in government during President Trump’s first administration, there were the threats of tariffs on aluminium and steel,” Hogan said.
“We were able to successfully have Australia exempted from these tariffs back then and the current Government must get the same result.
“A critical component was a strong ambassador – we had Ambassador Hockey who helped Australia to successfully negotiate exemptions from United States steel and aluminium tariffs.”
The Coalition has gone so far as to say the government should replace Kevin Rudd as US ambassador if that has the potential to change the tide.
“If there is a decision to be made and that Kevin Rudd’s not the right person to have these discussions, then we should be mature enough as a country to send someone who can have those discussions to get that carve-out,” Nationals leader David Littleproud told reporters in Parliament House.
Trump is expected to hold a press conference this week, likely on Tuesday or Wednesday, to outline his proposal for reciprocal tariffs aimed at matching those imposed on American exports.
“If they charge us, we charge them,” he said.