Trump’s Tariffs: What Australian exporters can expect and how to prepare
Trump’s Tariffs: What Australian exporters can expect and how to prepare
As Donald Trump approaches his second term, uncertainty looms over the future of US trade policy, with potential tariffs a key concern for Australian exporters.
With the Australian-United States Free Trade Agreement (AUSFTA) celebrating its 20th anniversary, many had hoped the agreement would protect Australian businesses from proposed tariffs.
However, BDO Tax Partner, Leonie Ferretter, said the AUSFTA’s role may not be as decisive as anticipated.
"The AUSFTA reduced tariffs on most non-agricultural exports and a significant portion of agricultural goods, but it’s not the agreement that will protect Australian exporters from new tariffs," Leonie said.
"During Donald Trump’s previous administration, Australia’s exemption from steel and aluminium tariffs was more due to the US’s $40 billion trade surplus with Australia and our strategic military alliance, rather than the AUSFTA."
Additionally, under President Trump’s “America First” agenda, free trade agreements such as the AUSFTA may come under scrutiny.
"Trump has historically shown a preference for renegotiating or abandoning agreements he believes don’t serve US interests, as seen with the exit from the Trans-Pacific Partnership and the overhaul of NAFTA into the US-Mexico-Canada Agreement," Leonie said.
With tariffs such as Section 301 and Section 232 still in place, Australian exporters could face additional challenges.
"Tariffs can be levied for a range of reasons, from anti-dumping measures to national security concerns.
"Section 301 tariffs, in particular, target trade practices that burden US commerce, while Section 232 tariffs can be applied when imports are seen as a threat to US national security."
With Trump’s inauguration just days away and little insight into what, if any, additional tariffs may be imposed, Leonie urged businesses to prepare for potential tariff increases.
"It’s crucial to map and understand your supply chain, confirm the accuracy of tariff codes, and ensure customs valuation of goods imported into the US is correct," she advised. "For related-party transactions, businesses need to assess how tariff hikes could impact transfer pricing arrangements."
Leonie also recommended exploring alternative markets in case US tariffs make goods unprofitable to sell. "Similar to the experience with China, exporters could consider alternative destinations for their goods," she said.
BDO’s global network of customs, international trade, and transfer pricing advisors is ready to assist businesses in navigating the complexities of these potential changes.
For media enquiries:
Tate Papworth
Manager, Media
E: Tate.Papworth@bdo.com.au
Ph: 0433 411 189