Will Australia Be Affected by US Tariffs?

With global trade tensions rising, many Australian businesses are wondering whether new US tariffs could impact them. While Australia’s overall trade surplus with the US makes broad tariffs less likely, certain industries—like steel and aluminium—could still be affected.

Australia’s Trade Relationship with the US

The US and Australia are strong trading partners, with major imports and exports flowing between the two countries.

• Australia’s top exports to the US: Financial services, gold, sheep and goat meat, transport services, and vaccines.
• America’s biggest imports into Australia: Financial services, travel, telecommunications, trucks, and royalty payments.

If new tariffs are introduced, they may not hit all industries equally but could create ripple effects across the economy.

The Bigger Picture: How Trade Wars Affect Australia

Beyond direct tariffs, Australia could feel the effects of a broader global trade war. China is Australia’s largest trading partner, making up 26% of our total trade in 2023. If trade tensions between the US and China escalate, it could slow demand for Australian goods and services, impacting business revenue and economic growth.

There’s also a pattern in former US President Trump’s trade strategy that suggests an all-out trade war might not happen. His approach has often involved bold policy announcements, followed by negotiations and partial reversals. However, there is always a risk that China could strike a deal with the US to buy more American goods at Australia’s expense.

What Does This Mean for Australian Businesses?

The biggest issue for businesses right now is uncertainty. Trade disputes can lead to:

• Rising costs – If tariffs affect products manufactured in China or other key markets, supply chain issues and price increases could follow.
• Market shifts – If US trade partners look for new buyers, Australia could see cheaper foreign goods flooding the market as companies try to offset losses.

For businesses that rely on global supply chains or exports, keeping an eye on trade developments is crucial. If you’re unsure how these potential changes could impact your business, Simmons Livingstone can help you navigate the financial and tax implications. Get in touch with our team today at 1800 618 800 or via email admin@simmonslivingstone.com.au.