In a televised address on 2 April 2025, President Trump has announced the imposition of the anticipated ‘reciprocal’ tariffs on global exports into the United States (US), together with some of the reasons for those tariffs being imposed.
Unsurprisingly, the rationale is ‘America First’ with the tariffs increasing the amounts collected by the US government and forming a barrier to encourage industries to be re–established in the US allowing for more local production and investment. In his address, President Trump provided examples of the ways in which US companies were already seeking to return investments in plant and production in the US.
As expected, the President rationalised the ‘base’ tariffs of 10% and higher ‘reciprocal’ tariffs on recent research by the United States Trade Representative identifying the types of non–tariff barriers in other countries which effectively imposed additional tariffs on US goods in addition to ‘official’ tariffs. In doing so, the President invoked the US International Economic Powers Act of 1977 as the legal authority for the imposition of the tariffs. During his address, the President made specific reference to the Australian biosecurity regime which does not allow US exports of beef and pork as a rationale for imposition of new tariffs on Australian exports of those products to the US.
What are the new tariff rates and when do they commence?
The new tariffs start with a ‘base rate’ of 10% on all imports into the US with higher rates being imposed on exports from other countries, presumably based on the US assessment of the effective tariffs being imposed on US exports to those countries by way of non–tariff barriers of different types. Australia is subject to the base 10% tariff for the time being with rates on other selected countries as set out below.
- Cambodia: 49%
- Vietnam: 46%
- Sri Lanka: 44%
- Bangladesh: 37%
- Thailand: 36%
- China: 34%
- Indonesia: 32%
- Taiwan: 32%
- Switzerland: 31%
- South Africa: 30%
- Pakistan: 29%
- India: 26%
- South Korea: 25%
- Japan: 24%
- Malaysia: 24%
- European Union: 20%
- Israel: 17%
- Philippines: 17%
- Australia: 10%
- Brazil: 10%
- Chile: 10%
- Colombia: 10%
- Singapore: 10%
- Turkey: 10%
- United Kingdom: 10%
The new tariffs are to be imposed from 12.01 am on 5 April 2025 in the US but they will not be imposed in addition to any existing tariffs recently imposed, such as on the 25% tariff imposed on imports of steel and aluminium products and motor vehicles to the US. Goods already laden and en route to the US will also not be subject to these new tariffs.
Australia’s response to the new tariffs
As expected, the imposition of these tariffs has been criticised in other countries including Australia. Having described the tariffs as “not being the act of a friend”, our Prime Minister today announced a series of immediate policy responses as follows:
“First – we will strengthen our anti-dumping regime to safeguard key sectors like steel, aluminium and manufacturing against unfair competition”.
“Second – we will provide $50 million to affected sectors particularly through peak bodies such as the National Farmers Federation to secure and grow new markets for their world-class products.
“Third – we will establish a new Economic Resilience Program through our National Reconstruction Fund. This will provide $1 billion in zero interest loans for firms to capitalise on new export opportunities.
“Fourth – just as we are already encouraging more people to buy Australian, our Labor government will buy Australian too … what this means is that Australian businesses will be front of the queue for government procurement and contracts maximising values for local businesses and the taxpayer.
“Fifthly – a Labor government will establish a critical mineral strategic reserve. I’ll have more to say on this over coming weeks.”
Obviously, there are concerns that some of these policies may also attract retaliatory action by our trading partners (including the US) as well as complaints to the World Trade Organisation (WTO) and additional tariffs and restrictions on Australian exports.
No doubt there will be ongoing discussions with the US on a way to reduce the tariffs or secure commitments to not increase the base tariffs on Australian exports. At the same time, other countries are working to expand existing concessional trade arrangements which may shift trade to those countries and away from US markets.
The US has imposed these tariffs notwithstanding commitments under Free Trade Agreements or WTO commitments. There would appear to be little real prospect of immediate relief against the tariffs based on those commitments.
What will be the consequences of the new tariffs?
It is too early to identify and advise on consequences for those exporting to the US, including who will be responsible for payment of the new tariffs. Much of that will depend on contractual arrangements and whether the increased tariffs need to be borne by the Australian exporters or the US importers. There is also the possibility that the imposition of these new tariffs may form the basis for termination of those contracts, perhaps in reliance on ‘force majeure’ provisions. Further, we will need details of whether duty–free entry will still be available under a ‘tariff concession order’ arrangement for exports of goods to the US which are not manufactured in the US.
Contact us
If you would like to discuss the impact of the new tariffs announced by President Trump, or require assistance both here or in the US (i.e. through firms in the US with whom we work on a regular basis), please contact a member of our Customs & Trade team.
We will continue to keep you advised on relevant developments as they arise.
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