Australia’s weak response to the introduction of tariffs by US President Donald Trump not only reflects poorly on the political class but also on the gaggle of commentators now suffering from amnesia about how ineffective and foolish such policies are.
Tariffs are, in essence, taxes on imported goods designed to protect domestic industries, which are then incentivised to be less innovative.
For businesses looking to reduce costs while maximising sales, innovation is key.
That task becomes significantly more difficult when high-quality goods and services from foreign countries become unnecessarily expensive due to tariffs.
Even more strangely, the strength of the US dollar has made imports from countries such as Australia cheaper, meaning that even with tariffs, the imported option remains competitive.
Despite its own domestic production, North America still demands significantly more beef.
In dollar terms, almost two-thirds of exports to the US were from non-monetary gold, which surged fourfold to $1.2 billion in November — up from the usual $200 million range — along with meat sales.
Total iron and steel exports to the US account for less than 5% of total exports based on the same data.
The narrative in some news articles suggesting that “analysts are worried” is lamentable as the real story is that Australia’s export trade remains both exciting and dynamic.
The country’s move away from protectionism in the early 1980s has significantly strengthened industries such as agriculture, food, apparel, electronics, design, and technology.
CSL, the world-class blood plasma company based in Melbourne, is a prime example — it was spun off from government ownership and has since thrived as a flagship of Australian medical export expertise.
The export sector is a key driver of the Australian economy and provides a real-time illustration of the private sector’s activities on a monthly basis.
For context, the US is Australia’s fifth-largest merchandise export destination by value, according to data from the Australian Bureau of Statistics.
While market reactions to headlines about “Trump Tariffs” are inevitable, the actual impact remains negligible.
A 25% tariff on steel and aluminium would undoubtedly make imports into the US more expensive.
However, for Australia, most of its exports in this sector are directed towards Asian markets and, increasingly, the Middle East.
That is the real Australian export story.
In light of the sensational headlines, worrying about hypotheticals that rarely materialise should give way to clearer thinking — keeping calm and carrying on.
Dan Petrie is Mining.com.au’s Head of Data, a former data editor at Bloomberg LP, analyst at Macquarie Bank and contributing data expert to Google Digital News Academy.
Write to Dan Petrie at Mining.com.au
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