Australian Trump supporters like Rinehart, Pratt silent on tariffs
While the media is having conniptions about Mad King Donald’s on-again-off-again-exempted-unexempted steel and aluminium tariffs, some obvious questions are going unasked.
For example, where are Australia’s diehard MAGA supporters when it comes to defending Australia’s economic interests?
How about billionaire heiress Gina Rinehart, perhaps our highest-profile Trump fan? Has she criticised the possible imposition of tariffs on Australia’s exports? So far, crickets — even though Rinehart, as a huge supplier of iron ore to China, has a vested interest in steel markets.
What about Anthony Pratt, who is such a big Trump fan he’s moving to the United States? Nothing from him.
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How about all the Trump fans at Sky News? Did they bring their usual insight and intelligence to standing up for Australia’s exporters? No, they bagged Anthony Albanese instead. Quelle surprise.
The other question is how much impact the tariffs will have on Australia.
The AMP’s chief economist Shane Oliver said in a note on Tuesday, “Even if Australian exports are not exempted from US tariffs the direct economic impact will be minor … steel and aluminium exports to the US are just 0.03% of [Australian] GDP”.
As Oliver goes on to note, the real problem for Australia in Trump’s tariffs is in lower levels of global trade and a hit to Chinese and global GDP, which will flow through to lower demand for our exports to China and other important markets.
Our experience when China itself tried to bully Australia into line with tariffs and bans suggests how the impact might be muted.
Research by the US Studies Centre looked at the impact of the Chinese actions and it was highly varied across industries. Cotton, for example, thrived after the initial impact via new relationships with buyers in Vietnam, Indonesia and Thailand. Cotton exports to Vietnam more than tripled between 2018 and 2022; by 2022, Australia was the country’s second-largest source of cotton. The benefits lasted beyond the end of China’s actions — in 2023, 36% of Australian cotton went to Vietnam.
China’s ban on Australian coal had minimal impact, especially once Russia’s attack on Ukraine precipitated a global energy price spike, with coal exporters finding buyers in Japan and Europe. The ban merely forced China to import cheaper, but lower-grade coal from Indonesia.
Barley producers also found new markets elsewhere, but prices were lower. The lifting of China’s restrictions saw shipments switch back to China and higher prices. And Australian wine exporters struggled as a result of China’s punitive tariffs due to a global wine glut.
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What’s clear about the mad king’s aluminium tariffs is that he would be well advised to exempt Australian imports. America’s aluminium production capacity, which has been in long-term decline, simply can’t replace the millions of tonnes currently imported. The result, inevitably, will be soaring aluminium prices in the US. Prices are already on the rise and will feed through into crucial industries like car manufacturing, construction and packaging.
As for steel, Australia now ships little steel to America. The overwhelming supply of Australian-owned steel in the American market comes from BlueScope’s 1-million-tonne-a-year electric arc furnaces and rolling mills in Ohio. BlueScope, which is a serial user of Australia’s notorious protectionist “anti-dumping scheme”, is now America’s fifth biggest steel producer and in fact will be a major beneficiary of the higher tariffs on imports. Unsurprisingly, Bluescope’s share price has hit a two-month high.
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