On 2 April, 2025, US President Donald Trump announced the implementation of new tariffs under the “Declaration of Economic Independence,” aiming to address perceived trade imbalances and bolster domestic industries. The key measures include:
As Australia generally has low tariffs on US goods (often under 5%), applying the reciprocal formula would result in tariffs of around 2.5%. As the baseline 10% tariff acts as a minimum threshold, it overrides the lower calculated rate, leading to Australian goods being hit with the 10% rate.
The measures announced today build on the previously announced 25% tariff on Australian steel and aluminium exports.
President Trump justified these measures by stating that the US has been “looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” emphasising a need to rectify longstanding trade disparities.
In his announcement, President Trump specifically addressed Australia’s trade practices concerning beef imports:
“Australia bans – and they’re wonderful people – but they ban American beef. Yet we imported $3 billion of Australian beef from them just last year alone. They won’t take any of our beef. They don’t want it because they don’t want it to affect their farmers. And you know what? I don’t blame them, but we’re doing the same thing right now starting at midnight tonight.”
It is unclear at this stage whether this implies the US will impose additional tariffs on Australian beef beyond the universal 10% or if it suggests potential non-tariff measures, such as import restrictions.
Australia does not have a blanket ban on US beef but enforces strict biosecurity measures, including restrictions stemming from concerns over Bovine Spongiform Encephalopathy (BSE) since 2003. Labelling these measures as a “ban” may reflect US intentions to challenge Australia’s biosecurity policies.
Prime Minister Albanese has labelled the US actions as ‘unwarranted’, and ‘not the act of a friend’. He ruled out matching the US tariffs in a ‘race to the bottom’, but suggested Australia may draw on dispute mechanisms built into AUSFTA to challenge the tariffs.
The PM also ruled out any compromises to Australia’s Pharmaceutical Benefits Scheme, our biosecurity regime, the media bargaining code, and legislation on minimum age access to social media.
He flagged support for impacted exporters including:
Trump’s tariff strategy has two aims: promoting domestic manufacturing growth and exerting economic pressure on geopolitical competitors. Of course, attracting manufacturing investment back to the US requires long-term confidence from investors, who typically plan in decades, and uncertainty around tariff permanence and potential retaliatory measures increases risk, deterring precisely the type of sustained investment Trump seeks.
Nevertheless, Trump’s strategy has significant domestic support, particularly among his political base, who strongly favour reshoring manufacturing and job creation. He has positioned these as national security priorities. Yet, the inevitable impact of tariffs on consumer prices—the precise issue many Trump supporters initially wanted resolved through his Presidency—could undermine this support over time, especially if cost-of-living pressures rise substantially.
This isn’t Australia’s first trade disruption rodeo.
Between 2020 and 2024, Australia faced significant economic coercion from China following diplomatic tensions involving human rights issues, national security laws and Australia’s call for an independent inquiry into COVID-19’s origins. China’s retaliatory measures targeted Australian barley, wine, coal, beef, seafood, and timber exports. Australian wine exports to China, previously worth over $1 billion annually, collapsed, and barley exports worth around $600 million faced severe trade barriers.
Australia successfully mitigated these impacts through rapid market diversification, supported by government programs led by Austrade and DFAT, opening new markets in South Korea, Japan, India, the EU, and the UK. Barley successfully shifted to Saudi Arabia and Southeast Asia, while wine producers expanded significantly into markets such as the US and UK.
Ironically, during Australia’s trade dispute with China, US exporters increased their market share in China, filling gaps left by Australian products. Now, with China likely to increase its reciprocal tariffs on US products there will be an opportunity for Australia to increase its own market share at US expense on products like wine, lobsters and beef.
However, given the uncertainty around the Australia / China bilateral relationship (illustrated most recently by Chinese naval activities off our coast), risks remain in the Chinese market and the government will advise exporters to diversify from both the US and China.
This means fewer obvious alternative markets available today than in 2020.
Australia’s successful diversification during its trade dispute with China does demonstrate the country’s resilience and adaptability under trade pressure.
The PM’s announcements about support packages and increased missions to diversification markets builds on learnings from this period.
After the election, the government will lean on regional agreements such as RCEP and CPTPP to broaden market access. There will be more emphasis on opportunities related to recent trade agreements with the UAE, India and opportunities identified in Nicholas More’s Southeast Asia Economic Strategy.
A revival of the European Union Free Trade Agreement (EU FTA) would be sensible, alongside deeper engagement with existing trade partners in Japan and Korea.
We should expect strong Australian advocacy within the World Trade Organisation and other coalition building initiatives to push back on the US tariffs. This would leverage the historical effectiveness demonstrated by Australia’s leadership of the Cairns Group, which successfully advanced agricultural trade liberalisation, often contrary to US interests.
Historically, tariffs and foreign policy rarely dominate Australian elections. However, this situation could be different for several reasons:
Inflationary pressures: Tariffs, and an emerging ‘trade war’ impacting supply chain costs could exacerbate the current cost-of-living crisis, directly impacting voters.
National sovereignty concerns: Trump’s economic coercion might extend beyond tariffs into ideological interference, as seen in Europe, such as attacks on social media regulation, diversity policies and research funding. Any perceived infringement on Australian sovereignty would likely provoke a strong public backlash.
Security and strategic implications: Heightened attention on Australia’s defence and strategic alliances, particularly AUKUS, and US troop presence in Darwin and Pine Gap may move from policy debates to public consciousness. Former Prime Minister Malcolm Turnbull’s recent critiques regarding strategic autonomy under AUKUS further highlight these tensions.
Beyond the direct tariffs on Australian exports, the potential for further escalation in global protectionism presents significant risks for Australia as an open, trade-dependent economy.
Other nations will follow the US, implementing retaliatory or defensive tariffs. Given Australia’s open market and reliance on global trade, a widespread increase in tariffs internationally will likely impact Australian exports, economic growth, and inflation.
From a geostrategic perspective, the indiscriminate nature of Trump’s tariffs challenges traditional alliances and may compel affected nations to reassess their diplomatic and economic alignments.
In the Asia-Pacific region, countries facing US tariffs might seek to strengthen economic ties with China as an alternative, potentially enhancing China’s influence and altering regional power dynamics. We have seen indicators of this in announcements of trade cooperation between China, Korea and Japan in recent days.
One of the important aspects for Australian businesses to watch is how the US / China dynamic unfolds in the wake of Trump’s tariff actions. Despite targeting both allies and competitors, it is clear that China looms large in Trump’s strategy. The overarching goal appears to be pressuring Beijing into economic and strategic concessions—whether that means reducing trade imbalances, reshoring manufacturing to the US or curbing what Trump perceives as unfair trade practices. Trump is clearly looking for concrete outcomes from China.
If these initial measures do not produce the desired results, or if China escalates with further punitive responses, the US may respond by employing more unconventional trade tools and sanctions as geopolitical levers.
Recent actions against Venezuela illustrate how Trump is willing to blend economic policy with strategic aims. In March 2025, the administration imposed a 25% tariff on goods from any country purchasing Venezuelan oil or gas. This secondary tariff approach essentially penalised not just Venezuela, but also third-party countries. While this kind of measure is more common in sanctions policy than trade, it highlights a willingness to innovate and escalate when the desired outcomes are not achieved.
If Trump were to adopt a similar strategy towards China, it could mean targeting countries that maintain strong trade relationships with Beijing. For Australia, this could involve signalling that continued high-volume exports to China, particularly in critical commodities like iron ore, LNG, and agriculture, might attract additional US tariffs or restrictions on Australian goods entering the US market. This wouldn’t necessarily sever the alliance or disrupt AUKUS, but it would put pressure on Australia to make difficult choices about its economic alignment. Disrupting major commodity exports to China would have significant implications for the Australian economy, including potential job losses and reduced GDP growth.
It is important to emphasise that this scenario is purely speculative, and no indication has been given that such measures will take place. However, it illustrates the slippery slope of a trade war in the context of geostrategic competition, where economic measures can quickly evolve into broader geopolitical pressure points. The challenge for Australia remains to maintain balanced economic relationships without appearing to definitively side with either superpower.
For SEC Newgate clients, the takeaway from these developments is clear: navigating the evolving geopolitical landscape requires strategic foresight and adaptive planning. The US tariffs on Australian exports, combined with the potential of an escalating trade war, and further tensions between the US and China, present a complex challenge that could significantly impact business operations and market access. As the situation unfolds, businesses will need to assess their exposure, engage with policymakers, and communicate effectively with stakeholders to manage risks and safeguard their interests.
SEC Newgate Australia is uniquely positioned to help clients understand these dynamics and develop tailored strategies to respond proactively. Whether it’s analysing exposure to new tariffs, identifying alternative markets, or crafting communication plans that resonate with both domestic and international audiences, our team offers the insights and expertise necessary to navigate this uncertainty. Engaging with SEC Newgate will ensure your business is prepared, resilient, and able to influence the policy conversations shaping Australia’s trade landscape.
Additionally, SEC Newgate’s Global Corporate and Geopolitical Advisory Council offers clients unparalleled insights into international trade dynamics, leveraging a global network of experts to help navigate complex geopolitical challenges and develop informed, strategic responses.
For further insights and what this means for you and your organisation, reach out to SEC Newgate Senior Adviser Sam Guthrie.
Sam Guthrie, Senior Adviser – [email protected]
SEC Newgate’s integrated approach draws on our national team’s experience and networks to deliver a full service offering.
