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19 Mar 2025 6:03
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  •   Home > News > International

    Donald Trump rejects Australia's bid for exemption from steel and aluminium tariffs

    Australia will not be granted an exemption from the Trump administration's 25 per cent tariffs on aluminium and steel imports, the White House says.


    Australia will not be granted an exemption from US tariffs on aluminium and steel imports, the White House says. 

    US President Donald Trump had previously said he would consider excluding Australia from the 25 per cent tariffs, which take effect on Wednesday.

    But White House spokeswoman Karoline Leavitt has now told the ABC: 

    "He considered it, and considered against it. There will be no exemptions."

    Asked why, Ms Leavitt said: "America First steel." 

    "If they want to be exempted, they should consider moving steel manufacturing here," she said. 

    Prime Minister Anthony Albanese described the decision as "entirely unjustified".

    "This is against the spirit of our two nations' enduring friendship, and fundamentally at odds with the benefits that our economic partnership has delivered over more than 70 years," Mr Albanese said.

    "Australia will continue working hard for a different outcome and discussions with the Trump administration are ongoing."

    Hopes for a reprieve from the tariffs were buoyed last month when Mr Trump promised "great consideration" after a warm phone call with Mr Albanese. But they were later dashed when Mr Trump's trade guru Peter Navarro said Australia was "killing" American aluminium. 

    Speaking to the ABC at the White House on Tuesday, local time, Mr Navarro said Australia was among countries that "abused" tariff exemptions granted during Mr Trump's first term. 

    "There were many country exemptions given, not just to Australia but to many other countries, and every single country abused those exemptions," he said.

    "The collective result was to weaken the tariffs to the point that they simply didn't provide any protection anymore.

    "So what the lesson from the first Trump tariffs has been is that exemptions to anybody are counterproductive. They don't work for the American people."

    Asked if a future carve-out for Australia was still possible, he said:

    "The policy is no exemptions, no exclusions, and that will change if the president changes his policy. But there's a very good reason why 'no exemptions, no exclusions' exists as a policy. 

    "It's because when we were kind enough as a country to make those kind of gestures to our friends, they bit the hand that fed them, and that's not going to happen again."

    Mr Navarro has been accusing Australia of dumping cheap, government-subsidised aluminium into the US in breach of an agreement reached during Trump's first term, when Australia was exempted from similar tariffs.

    A recent flurry of Washington meetings involving ambassador Kevin Rudd and treasurer Jim Chalmers have yielded little evidence of progress towards an exemption, and Foreign Minister Penny Wong admitted a fortnight ago Australia had a "hill to climb".

    Mr Albanese said steel and aluminium exports to the US represented less than 0.2 per cent of the total value of Australian exports, and neither product was in the top 10 Australian exports to the US.

    Australia argues that, unlike most countries, it usually imports more from the US than it exports there, a trade surplus for the US contrasting with the trade deficits it has with most other countries, and which infuriate Mr Trump.

    Then-prime minister Malcolm Turnbull successfully mounted the same argument during the first Trump administration. But his recent criticisms of Mr Trump resulted in an angry rebuke from the US president, who used social media to label the former PM a "weak and ineffective leader".

    On Wednesday, Deputy Opposition Leader Susan Ley said Mr Albanese should have travelled to Washington to plead Australia's case this time around.

    "One thing we do know about the Trump administration is that it's about personal relationships," Ms Ley said on Sky News.

    "It's about building the personal networks and the communication one-on-one. And that’s what Anthony Albanese has clearly not done."

    Mr Albanese said it was hypocritical for the opposition to frequently pressure him to travel abroad to deal with global issues, but criticise him whenever he leaves the country.

    The tariffs are part of a broader suite of protectionist measures implemented by the Trump administration. 

    Earlier on Tuesday, Mr Trump said aluminium and steel imports from Canada would be subject to 50 per cent tariffs — double those imposed on other partners, as part of an escalating trade war between the North American neighbours.

    Bigger problems than no exemption

    Richard Holden, a professor of economics at UNSW, said it was "good that we've tried" to secure an exemption, but that the far bigger risk to Australia was the broader shock to the global economy from Mr Trump's tariff program, seen in this week's market tumbles.

    "I think the market's reaction is that this Trump administration does seem different from last time and it doesn't seem like it's all just bluster," he said.

    Treasury and the Reserve Bank have both modelled scenarios for how US tariffs and likely waves of retaliation could reverberate in Australia, finding a modest negative shock to economic output.

    Professor Holden said the effect of steel and aluminium tariffs themselves was even smaller.

    "If you work in an aluminium smelter in Australia it's bad, and I'm not insensitive to that, but as a share of GDP, our aluminium and steel exports to the US are not huge. So in the aggregate it's bad news, but I don't think we should be too worried."

    Australia exported roughly half a billion US dollars ($A793 million) worth of steel and aluminium to the US last financial year, a small fraction of the total.

    And from the Australian side, US sales represent only one-tenth of aluminium exports, with most heading to Japan and South Korea.

    Australia's major steel exporter BlueScope would also be partly sheltered by the fact it has a large American steelmaking workforce, while the Whyalla steelworks is currently government-owned, albeit temporarily.

    "It would be better to have an exemption than not, for sure, but I just worry about poking the bear," Professor Holden said.

    "What I worry about is the real nightmare scenario if Trump or Navarro wake up to the fact that we sell a lot of iron ore to China … And then Trump gets on the phone and says don't sell any more."

    Retaliation would be 'insane'

    Professor Holden agreed with the assessment of Treasury, held broadly by economists, that Australia should not follow the lead of Canada and China in retaliating to any tariffs with tariffs of its own on American imports.

    Last month, Treasury Secretary Steven Kennedy warned Australia would "bear nearly all the cost", because the main effect of tariffs in any country is to increase the price local consumers pay for goods.

     

    "It will seem counterintuitive to many, but responding to tariffs or trade restrictions with similar measures will only make matters worse," he said.

    Professor Holden said retaliation would be "insane".

    "I think there's a very big case that no matter what tariffs anyone puts on Australia, we probably shouldn't respond.

    "Exports are very important to us as a small, open economy because we buy so many things from overseas that we can't possibly make here, and we benefit so much from what we export.

    "If you retaliate, you're trying to inflict some pain back on them, so we'd have to pick things that we buy a lot of from the United States. What are we going to do, make computers and phones and big trucks way more expensive for Australians and maybe collect some government revenue?"

    Mr Albanese said the Australian government was not considering retaliatory tariffs. 

    "Such a course of action would only push up prices for Australian consumers and increase inflation," he said.

    © 2025 ABC Australian Broadcasting Corporation. All rights reserved

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