Australia and the US entered into the much-lauded Australia-US Free Trade Agreement (AUSFTA) 20 years ago this year. At the time, the AUSFTA reduced most of Australia’s non-agricultural exports and 75% of agricultural exports to duty-free, while the remaining duty rates phased down over the subsequent years.
Fast forward from 2005 to 2017, Donald Trump, then-president of the US and now president for a second term, proposed his policy of “America First” by implementing tariffs on certain goods imported into the US. Of particular relevance to Australian exports were the steel and aluminum tariffs of 25% and 10%, respectively.
Whilst the Australian Prime Minister at the time, Malcolm Turnbull, successfully obtained an exemption from the tariffs, the AUSFTA did not play a part in obtaining that exemption. Rather, it was the US’s significant trade surplus with Australia and Australia’s strategic military alliance that ultimately persuaded the US President at the time to approve the exemption.
President Trump has expressed concerns about broad FTAs that do not serve the US’s best interest. During his first term in office, he exited the US from the Trans-Pacific Partnership Agreement negotiations and actively worked to remove the 30-year-old North America Free Trade Agreement (NAFTA) between the US, Canada and Mexico. That agreement was replaced in 2020 by the United States-Mexico-Canada Agreement. Hence, there is considerable uncertainty as to how much protection the AUSFTA will protect Australian exporters.
Since President Trump started his second term, he has taken swift actions to impose tariffs on goods of Canadian, Mexican and Chinese origin—and then pause some of them twice (for prior coverage, see the alert dated 10 March 2025). President Trump has also threatened tariffs on the EU and other countries, as well as reciprocal tariffs and other trade measures beginning 2 April on all countries with duties on U.S. products, which would negatively impact Australia regardless of whether the country is able to avoid US tariffs. President Trump has also declined to provide an exemption this time for Australian exports of steel and aluminium, with tariffs expected to be imposed imminently.
Australia is bracing itself for the possible imposition of tariffs by the US.
There are a range of additional tariffs that can be implemented (noting that “Section 301” and “Section 232” tariffs remain in place from President Trump’s first term). These include:
Although, with the exception of steel and aluminium, the Trump administration has not yet announced tariffs on Australia, there are some practical steps exporters can take now, including the following:
Leonie Ferretter
BDO in Australia
Fast forward from 2005 to 2017, Donald Trump, then-president of the US and now president for a second term, proposed his policy of “America First” by implementing tariffs on certain goods imported into the US. Of particular relevance to Australian exports were the steel and aluminum tariffs of 25% and 10%, respectively.
Whilst the Australian Prime Minister at the time, Malcolm Turnbull, successfully obtained an exemption from the tariffs, the AUSFTA did not play a part in obtaining that exemption. Rather, it was the US’s significant trade surplus with Australia and Australia’s strategic military alliance that ultimately persuaded the US President at the time to approve the exemption.
President Trump has expressed concerns about broad FTAs that do not serve the US’s best interest. During his first term in office, he exited the US from the Trans-Pacific Partnership Agreement negotiations and actively worked to remove the 30-year-old North America Free Trade Agreement (NAFTA) between the US, Canada and Mexico. That agreement was replaced in 2020 by the United States-Mexico-Canada Agreement. Hence, there is considerable uncertainty as to how much protection the AUSFTA will protect Australian exporters.
Since President Trump started his second term, he has taken swift actions to impose tariffs on goods of Canadian, Mexican and Chinese origin—and then pause some of them twice (for prior coverage, see the alert dated 10 March 2025). President Trump has also threatened tariffs on the EU and other countries, as well as reciprocal tariffs and other trade measures beginning 2 April on all countries with duties on U.S. products, which would negatively impact Australia regardless of whether the country is able to avoid US tariffs. President Trump has also declined to provide an exemption this time for Australian exports of steel and aluminium, with tariffs expected to be imposed imminently.
What Can Australian Exporters Expect?
Australia is bracing itself for the possible imposition of tariffs by the US.There are a range of additional tariffs that can be implemented (noting that “Section 301” and “Section 232” tariffs remain in place from President Trump’s first term). These include:
- Anti-dumping and countervailing duties: Duties imposed where goods are exported to a country with an export price lower than the domestic market (or subsidised price) causing material injury to the industry in the importing country;
- Section 301 Tariffs: Imposed by Presidential Proclamation under the Trade Act of 1974 where any foreign government act, policy or practice violates an international trade agreement or is unjustified, unreasonable or discriminatory, and burdens or restricts US commerce;
- Section 232 Duties: Imposed under the Trade Expansion Act of 1962, where the President is authorised to impose tariffs to restrict imports that threaten US national security;
- Section 201 “Safeguard” Tariffs: Imposed under the Trade Act of 1974 by Presidential Proclamation when import surges that cause or threaten injury to US industries;
- Section 221 Balance of Payment Quotas and Tariffs: Imposed under the Trade Act of 1974 against countries with balance-of-payment surpluses; and
- Section 338 Tariffs: Imposed under the Tariff Act of 1930 on merchandise originating in countries that have discriminated against US commerce.
Practical Next Steps for Australian Exporters
Although, with the exception of steel and aluminium, the Trump administration has not yet announced tariffs on Australia, there are some practical steps exporters can take now, including the following:
- Map and understand your organisation’s supply chain and ability to make changes if needed;
- Accurately assess the real country of origin of the goods you are manufacturing using legislated rules of origin;
- Confirm the accuracy of the tariff codes being used in the US at the time of import;
- Given tariffs are mostly levied on values, ensure that the customs values of the goods are accurate, and where appropriate, that all non-dutiable costs and charges are invoiced separately from the goods;
- For related parties, understand the impact of tariff increases on transfer pricing arrangements and where the increased tariffs are allocated;
- Research and understand alternative markets, particularly if additional tariffs would make your goods unprofitable to sell in the US; and
- Understand your industry and whether or not goods diverted from the US market in response to possible additional tariffs are being dumped in Australia and injuring your industry so that anti-dumping investigations can be considered.
Leonie Ferretter
BDO in Australia