Australia has decided not to impose retaliatory tariffs on the United States, despite President Donald Trump ruling out exemptions on steel and aluminium tariffs for all countries. Earlier, Trump had suggested he would consider sparing Australia from these tariffs, citing the US trade surplus with the country. However, on Tuesday, the White House confirmed that the 25% tariffs on imported steel and aluminium would take effect as planned.

Prime Minister Anthony Albanese called the decision "unjustified" and contrary to the strong economic and diplomatic ties between the two nations. Despite this, he argued that responding with counter-tariffs would only drive up costs for Australian consumers and fuel inflation. "Tariffs and trade wars only hurt economies. They slow growth and increase prices, which ultimately affect ordinary people," Albanese said.

During his first term, Trump had exempted Australia from these tariffs, but that exemption no longer applies. Albanese vowed to continue advocating for relief, stating he had requested a call with Trump but had no plans to visit the US to negotiate in person. Meanwhile, Trump's tariff policies also briefly targeted Canada, as he threatened to hike tariffs on Canadian steel and aluminium to 50%—only to backtrack hours later, causing market volatility.

For Australia, the immediate economic impact is expected to be limited, as steel and aluminium exports to the US account for less than 0.2% of the country’s total exports. However, the tariffs could indirectly affect Australian miners who supply raw materials for global metal production. "Given the complexity of global supply chains, it’s hard to predict the full impact, but overall, this move will have negative consequences," said Scott French, an economics professor at the University of New South Wales. Despite the setback, Australia remains a key security ally of the US in the Indo-Pacific. The US maintains a trade surplus with Australia, which grew to $17.9 billion in 2024—a 1.6% increase from the previous year, according to the US Trade Representative’s office.

Disclaimer: This image is taken from Reuters.