AUSTRALIAN beef, sheepmeat and goatmeat will be exposed to a ten percent tariff for exports to the United States from midnight tonight*, under sweeping new ‘reciprocal’ tariff measures announced by US President Donald Trump this morning, Australian time.
While the size of the tariff on Australian exports is at the upper end of the scale anticipated by Australian stakeholders, a long list of other countries exporting goods to the US will be subjected to tariff impositions much higher than Australia’s 10pc.
Major beef export competitor Brazil will also sit among the ‘baseline’ trade partner countries on 10pc, but it remains unclear whether that will be stacked on top of Brazil’s existing 26.5pc tariff on beef exports to the US, having triggered its annual quota back in January.
On lean beef trimmings used to make US hamburgers alone, it is estimated that the tariff on Australian product will cost the US consumer US$180 million a year.
During a press conference immediately after this morning’s tariff announcement, Australian Prime Minister Anthony Albanese fired off a strongly worded response, saying if President Trump’s actions were indeed ‘reciprocal’, then the US tariff level would be zero, not 10pc.
“These are not the actions of a friend of Australia,” the Prime Minister said.
He stressed that Australia’s biosecurity (a reference to protocols surrounding the question of US beef imports to Australia) was not open to negotiation.
Mr Albanese said Australia would not be imposing retaliatory tariffs on the US, but flagged a large support fund for Australian exporters impacted by the decisions to help source alternate markets for Australian products.
Aussie beef in Trump’s sights
During the early stages of Trump’s long, often rambling delivery this morning, he singled out Australian beef for mention, saying Australians were wonderful people, “but they banned American beef – yet we imported US$3 billion worth of Australian beef 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 (it was unclear whether this statement was referring to biosecurity risk or simply competition from imports).”
“I don’t blame them, but we are doing the same thing right now, starting at midnight tonight.*”
Beef Central addresses the topic of whether US beef exports to Australia are actually ‘banned’ in a separate item appearing later today.
Many other large US trading partner countries, dubbed the ‘worst offenders’ by Trump, were treated far more severely than Australia in this morning’s announcements. That’s despite Trump’s instance his tariffs were designed to be ‘kind,’ and were ‘discounted to half the actual calculation of what they should be.’
China was clearly singled out, being hit with a 34pc tariff on goods into the US. Vietnam was hit with a 46pc tariff, the EU 20pc, South Korea 25pc and Taiwan, 32pc.
Australia sat within a small group of remaining countries imposed with a ‘baseline’ tariff of 10pc. Others on that list included the United Kingdom, Singapore, Brazil, Turkey, New Zealand, Chile and Colombia.
“The US can no longer continue with a policy of unilateral economic surrender,” Trump said this morning.
“For years, hard-working Americans were forced to sit on the sidelines as other nations got rich and powerful – much of it at our expense,” he said.
“The US has been looted and pillaged by other nations for too long.”
US Democrats have already responded to Trump’s proclamation of “Liberation Day” this morning, instead describing the measures as “Recession Day.”
Prominent US economist Prof Mary Lovely from the Peterson Institute for International Economics said she believed most US people were stunned by how high the tariff rates were.
“We did expect an across the board tariff of maybe 10pc, but these tariff rates on major trading partners like China and Europe, and some of our Asian allies are absolutely stunning,” she said.
“Because he chose to do country-by-country tariffs, there’s just enormous opportunity here for arbitrage – some companies may consider moving operations to countries facing lower US tariffs in order to be able to export successfully into the US.”
“But these moves are meant to basically close off the US economy,” Prof Lovely said.
“Quite clearly, US consumers will be faced with higher prices, and slower long-term economic growth. The US is about to receive an enormous jolt on the price of goods we import. It (imports) is very important, in certain sectors, and Americans will feel the brunt of this, quite quickly.”
No basis in logic
Prime Minister Albanese said Trump’s tariff impositions on Australia were totally unwarranted.
“The US administration’s tariffs have no basis in logic, and go against the basis of our two nations’ partnership. This is not the act of a friend, and the decision will add to uncertainty in the global economy. It will push up costs for American households. It is the American people who will pay the biggest price for these unjustified tariffs,” Mr Albanese said.
“This is why the Australian government will not be seeking to impose reciprocal tariffs on the US – we will not join a race to the bottom that leads to higher prices and slower growth.”
In a clear reference to US beef access to Australia, the Prime Minister said Australia would not weaken the biosecurity measures that protect our farmers from disease or contamination risks.
“It fact it’s our priority to strengthen biosecurity,” he said. “One of the features that makes Australian food and fibre the best in the world is that people everywhere know that it stands for quality, safety and clean & green.”
Even prior to the suspension of US beef exports to Australian back in 2003 over the detection of BSE in the US beef herd, trade into Australia was miniscule.
Beef Central wrote about early attempts to revive access in this 2015 article. During the 1980s and 1990s, prior to the suspension, volumes never exceeded 100 tonnes in any year. Some have interpreted the US request to restore trade as ‘symbolic’ rather than commercially significant, signalling to other, larger customer countries that US beef has access to a nation with the some of the tightest biosecurity regulations and lowest disease presence in the world.
The US only represented 5pc of Australia’s total annual exports (all commodities, not just beef), while many other countries would be hit much harder by today’s issues than Australia, Mr Albanese said.
“Don’t underestimate the impact that the US tariffs may have on other countries within our region,” was the message.
$50m in support for affected sectors
The Federal Government announced this morning that $50 million would be provided to support sectors affected by today’s tariff developments, targeted at growing new markets, to be spent within the first 100 days of the upcoming election.
A new economic resilience program will also be established through the national reconstruction fund, providing $1 billion in zero interest loans for firms to capitalise on new export opportunities.
Trade minister Don Farrell said Australia would continue to engage with the US to seek to remove today’s unfair tariffs on Australian goods.
“We believe its by negotiation, by discussion and sitting down and explaining to people the issues at hand that we can best present the case for Australia for these tariffs to be removed,” he said.
Fresh dialogue with EU over an FTA
Minister Farrell said already since the US tariff issue had emerged, dialogue with the European Union over the establishment of a Free Trade Agreement had been revived.
“Circumstances have changed since the last time we had discussions with our European colleagues,” he said. “The opportunity to establish an FTA with Europe, on better terms than what was previously offered, now exists.”
“We’re going to continue the opportunity to expand trade opportunities with all our trading partners.”
“It’s a changing world, but we have to push Australian export companies out into the world, beyond the US.”
* A White House Statement following Trump’s address has since clarified that most tariffs on US trading partners will not be applied from midnight tonight as he suggested, but from 5 April.
- A separate article today will summarise Australian industry and government reaction to Trump’s tariff measures announced this morning.
Great article Jon.
Could Beef Central consider undertaking a story with regards to how the tariffs may benefit Australia on 2 fronts that I’m not hearing many people discuss:
* Given these tariffs have hit both Australia and Brazil, this will surely raise the value of the US domestic herd by essentially the tariff rate perfect. I expect this will influence domestic US farmers to sell some of their breeding stock earlier than they normally would have during the restock phase they’re going through. I’m wondering if this will prolong and inhibit US rebuild which will be to Australian exporter advantage for longer than we expected pre-tariff.
* Noting China, Japan, and ROK tariffs. I’d expect this will trigger reciprocal behaviour from their Governments and consumers, influencing their importers to move beef sourcing arrangements away from the USA out of spite and towards trusted suppliers like Australia.
I overall see the tariffs are likely to Australia’s net advantage over the short and medium term. – Sam
Thanks Sam. We’re onto it, with an article to appear early next week, covering these, and related topics. By then we should know what impact (if any) there is on export meat sales demand, both from the US and other customer countries. We agree with your basic premise, but let’s ask the experts! Editor
FTA’s are a waste of time, especially when negotiated with foreigners of superior intellect than our mob. Countries should never be food insecure if possible. The US is capable of feeding themselves as is Europe. Asia is different. Australia should be more concerned about defending our assets ( exports will take care of themselves). Tariffs will come and going, once we lose our assets, they aren’t coming back.
Please explain why tariffs of our meat going into the US will affect prices of our meat here in Australia?
As far as we are aware, that has not been stated in Beef Central’s coverage, Nicholas. Perhaps you saw it or heard it elsewhere.
Regardless, here’s a couple of points to consider. This is an import tariff, imposed on US importers, not Australian exporters. US importers will have to factor the cost into their future buying decisions. Most of the cost is likely to be borne by the US consumer, as the importer attempts to pass the cost on down the line. Some may attempt to ‘share’ the burden through reduced margins among both the importer and exporter. However if Australian exporters have other customers on their books, the US risks missing out. Editor
Given US producers are getting close to twice what australian producers get for their carcasses I fail to see how US meat could ever be cost competitive here.
If it could somehow be cost competitive, then it means Australian producers are getting ripped off by somewhere further up the chain. Or there is a large amount of inefficiency in the system sucking away all the wealth creation producers do.
In any case as as trumps plans are, I think not even a crystal ball could read what goes on in his mind. All I can see is this being a negative to the US economy, but maybe that is the plan.
You’re right, Paul. Even before Australia suspended US beef back in 2003 over BSE detections, shipments to Australia never exceeded 100 tonnes a year. Editor
Its over double Paul actually TRIPLE x 3
The US Beef Grower gets subsidies, plus gets paid the same $3.60 but in USD per POUND !
This means 1.35 x 2.2 = 2.97 times just call it 3 times the price at the Saleyard… 300% more same steer same cow same heifer… 1/3 in Australia
NB. Ford Kenworth John Deere twice the price to Australians.
Could someone please clarify if the 10% tariff being imposed is reciprocal or not. Trump maintained it was and Albanese at his press conference this morning stated there were no tariffs on the USA. I know there is 10% GST levied on any goods I import from America.
Is there a similar tax levied by the USA on Australian beef entering their country?
Trump mis-used the term ‘reciprocal’ in terms of Australian beef in this morning’s address. We apply no tariff on US beef, nor (under the US-AUS FTA that’s operated since 2016) has the US imposed tariffs on Australian beef up to now. Editor
George, in paying the GST on imported goods from the USA, Trump considers this to be an import duty paid to the Australian government. In fact, USA do not have a national GST imposed on their sales. So it can be understood why he sees their tariff of 10% being reciprocal. He is seeking to match our GST with his tariff.
Australian Cattle Industry Council
Thanks for the clarification John.
So in reality we DO have a ‘tariff ‘ of 10% on the American beef which is allowed into this country at present.
I would say Trump has some justification for his actions.
I hope that common sense prevails and the situation is resolved soon, like many other readers of Beef Central 100% of my income derives from the sale of slaughter cattle..