March 12, 2025
SYDNEY – Australia is quietly making contingency plans for the impact of Mr Donald Trump’s steel and aluminium tariffs even as it urgently tries to persuade the US President to provide an exemption as he did in his first term.
In a sign of the fading hopes in Canberra of winning a reprieve from the proposed 25 per cent tariffs, Australian Trade Minister Don Farrell has encouraged steel and aluminium exporters to look to alternative markets such as Japan, South Korea, India and countries in South-east Asia.
The United States accounts for about A$1 billion (S$837 million) of purchases of Australian steel and aluminium each year, or about 10 per cent of total Australian exports. The US is the largest export destination of Australian steel and the third-largest of aluminium.
Mr Farrell was said to have met steel and aluminium producers and trade organisations from the industry last week to discuss plans to diversify exports.
The Australian Trade and Investment Commission and the Department of Foreign Affairs and Trade are believed to be helping the industry to deal with the potential tariffs, which are due to go into effect on March 12.
Mr Farrell told The Straits Times on March 11 that the government was adopting a “calm, persistent” approach to press its case with Washington.
“Australia and the United States are trusted partners, and we are using every opportunity to make it known to our friends in America the immense benefits of our partnership,” he said.
“When it comes to trade more broadly, the government has been working hard to help expand opportunities for Aussie businesses to enter new markets. This includes… strengthening economic ties with South-east Asia and India through a range of investment and business initiatives.”
Currently, South Korea is the biggest buyer of Australian aluminium, accounting for 34 per cent of exports, and Japan accounts for 23 per cent, according to local industry data. The US buys about 20 per cent of Australian steel exports, followed by Bangladesh (13 per cent), India (9 per cent), Indonesia (8 per cent) and Vietnam (7.5 per cent), according to the Observatory of Economic Complexity.
The US tariffs, if implemented, would damage Australia’s relations with its closest ally and deliver a political blow to Australian Prime Minister Anthony Albanese ahead of a general election, which is due to be held by May.
Though the tariffs are not expected to seriously harm the Australian economy, the government is concerned about flow-on effects, such as other exporters flooding Australia with below-cost metals.
In anticipation, the government has reportedly been looking to tighten anti-dumping measures to prevent such flooding. It is understood that the Anti-Dumping Commission, a government agency which investigates dumping, could be given greater powers to proactively investigate potential dumping.
Of the 10 most recent alleged dumping cases listed by the commission, eight involve steel or aluminium while the other two involve silicon metal and tomatoes. Six of the 10 cases involve Chinese exporters.
When contacted by ST, Minister for Industry and Science Ed Husic would not comment on the reported anti-dumping plans.
Mr Albanese and senior officials have made last-ditch appeals for an exemption from the tariffs, arguing that Australia is a US ally, has a free-trade deal with Washington, and is one of few countries that has a trade deficit with the US. They also pointed out that Australia sells steel to US manufacturers, which would be hit by higher prices if the tariffs kick in.
Mr Albanese, who leads the Labor Party, is under pressure to try to win an exemption from the tariffs, especially as former prime minister Malcolm Turnbull, who led the Liberal-National Coalition, was able to secure an exemption during Mr Trump’s first term.
The current Coalition leader, Mr Peter Dutton, told reporters on March 11 that Mr Albanese and his senior colleagues should be doing more to speak directly to their US counterparts to appeal for an exemption.
“He (Mr Albanese) needs to be able to deal with the President, and it’s in our country’s best interest that he’s successful… But he’s actually got to pick up the phone and start doing the work, as Malcolm did,” Mr Dutton said.
Mr Albanese spoke with Mr Trump by phone in February about the tariffs and secured a promise from the US President to give “great consideration” to an exemption. But no further details about any leniency have been reported following the call.
Mr Turnbull had acknowledged that the government’s chances of securing an exemption this time are low. He told ABC News on March 10 that Mr Trump regretted giving Australia an exemption in 2018 because after that, he had to grant exemptions to other countries as well. The current US administration, Mr Turnbull said, is more likely to refuse any exemptions.
Dr Kevin Rudd, Australia’s ambassador to the US, has been meeting officials in Washington to push Australia’s case. The former prime minister held a meeting on March 8 with US Commerce Secretary Howard Lutnick but was unable to secure an exemption.
The Australian Steel Institute and the Australian Aluminium Council (AAC), which represent the steel and aluminium sectors, respectively, would not comment to ST on any plans being taken to prepare for the tariffs.
AAC head Marghanita Johnson said in a statement on March 11: “We are still working to understand the impact of tariffs on Australia’s aluminium trade… We will continue working with the Australian government and its representatives on this important issue.”
- Jonathan Pearlman writes about Australia and the Pacific for The Straits Times. Based in Sydney, he explains matters on Australia and the Pacific to readers outside the Oceania region.