The US President’s ‘liberation day’ tariff announcement has drawn criticism worldwide. But for the most part, Australian food and wine companies, and commentators, seemed not to be unduly concerned, at least for now.
The Trump regime has imposed a flat 10 per cent tariff on Australian and New Zealand imports, which totalled about US$15 billion last year. About $3 billion of that was beef which President Trump singled out during his announcement address at the White House.
“Australia bans – and they’re wonderful people, and wonderful everything – but they ban American beef. They won’t take any of our beef. They don’t want it because they don’t want it to affect their farmers and, you know, I don’t blame them but we’re doing the same thing right now, starting at midnight tonight, I would say,” said Trump.
However, he failed to mention the reason for the ban: Imports of US beef were banned in 2003 after bovine spongiform encephalopathy (BSE) – also referred to as Mad Cow Disease – was detected in US cattle in 2003.
Prime Minister Anthony Albanese said Australia would not be changing its strict biosecurity controls on meat, because it “could do enormous damage to our meat products”.
As former NSW Farmers president James Jackson, a veterinarian and beef and cattle producer, told the Sydney Morning Herald, it would be “catastrophic” if the disease spread in Australia. Livestock sales would have to stop, and cattle would have to be slaughtered to prevent the disease from spreading.
“A lot of farmers would go broke, as well as a lot of meat processors,” Jackson said. “We wouldn’t agree to trade away [biosecurity] standards to get access to a market.”
The US is Australia’s largest beef export market, contributing 6 billion hamburgers across the US annually. One analyst calculated that the new tariff would cost US consumers an additional $600 million a year.
No immediate impact, says academic
Robert Brooks, professor of econometrics and business statistics at Monash Business School, predicts a “minimal” direct impact on the Australian economy – but warns the indirect impact may be more significant, especially if Australia engages in a “tit-for-tat trade war” which would ultimately dampen global economic growth.
“What happens to growth in China will be critical. Any slowdown there, particularly due to escalating trade tensions, could have ripple effects for the Australian economy. Even though we’ve been called ‘wonderful people,’ Australia’s beef exports are facing tariffs due to a biosecurity measure.”
He said the beef industry must look for alternative export markets to stay viable.
Treasury Wine Estates is unconcerned
Listed Australian wine exporter Treasury Wine Estates (TWE) appeared unmoved by the imposition of a tariff on Australian wine imports into the US, noting in a stock-exchange filing that it did not anticipate a material impact on its business.
The Treasury Americas division contributed 36 per cent of TWE’s group pretax profit during the first half of the current financial year, and the company was well placed, given only about 15 per cent of its US portfolio was sourced from Australia and New Zealand, equivalent to about A$35 million. This primarily comprised the 19 Crimes range from Australia and Matua from New Zealand, which was exported as bulk wine and bottled in the US.
Unprecedented move questioned by academics
Dr Nicola Charwat, senior lecturer, business law and taxation at Monash Business School, described the ‘liberation day’ tariffs as “a systemic rejection of the post-war trading order”. She said they represent “the culmination of the abandonment of multilateralism and the turn to mercantile, power-based trade relations”.
The way they have been imposed gives rise to a high level of uncertainty, she continued.
“The framing is problematic – they are reciprocal in the face of perceived ‘unfairness’ to the US rather than specific economic harms. It appears that Trump or the US can redefine any trade policy difference as unfairness and reach for tariffs.
Charwat said Australia finds itself in “a particularly difficult position” despite seemingly favourable circumstances: The US maintains a trade surplus with Australia (something Trump typically values), Australia imposes no direct tariffs on US goods, and has been a steadfast security ally. “Yet even these advantages may not secure an exemption.”
Fresh produce exemption call
The trans-Tasman fresh produce lobby group has already called for exemptions to be made to fruit and vegetables shipped to the US.
“This is a pivotal moment for the fresh produce industry,” said Belinda Wilson, MD of the International Fresh Produce Association Australia and New Zealand (IFPA ANZ), who is currently in the US.
“Tariffs on Australian and New Zealand fresh produce would restrict trade, limit access and increase food costs at a time when global food security is already under pressure.”
Last week, the IFPA ANZ sent a communication to US Secretary of Commerce Howard Lutnick, Secretary of Agriculture Brooke Rollins, and US Trade Representative Jamieson Greer, urging the Trump administration to exempt fresh produce and floral products, citing their perishable nature, contribution to public health, and the shared value of seasonal trade partnerships.
A comical side
There were also signs of confusion within the Trump administration with Norfolk Island – a tiny Australian territory – listed separately on the tariff schedule and hit with a rate of 30 per cent, compared with Australia’s 10 per cent. It was not immediately clear if the two rates should be combined or only the higher rate applied.
“Last time I looked, Norfolk Island was a part of Australia,” Albanese told the Australian Broadcasting Corp. The separate, higher tariff “was somewhat unexpected and a bit strange”, he said.
US government data shows the US recorded trade deficits with Norfolk Island for the past three years. The island exported $300,000 worth of goods to the US in 2022, $700,000 in 2023 and $200,000 last year, while its imports from the US remained at $100,000 in those years. Norfolk Island’s imports from the US peaked at $11.7 million in 2020, when no exports were recorded, but the data did not specify what goods were traded.
Norfolk Island business owners who spoke with Reuters could think of no manufacturing industry on the island, and added that its main industry by far was tourism. One pest control business owner, who asked not to be named, said that although they did not export to the US, they imported some rodent bait from the US via Australia.
“Products from Norfolk Island are going to have a 29 per cent tariff?” asked Gye Duncan, a Norfolk Island tax consultant. “Well, there is no product, so it’s not going to have an effect.”
There were dozens of other tiny territories that appeared on the same list as China and the European Union as recipients of Trump’s highly anticipated tariff regime, even though they do not have a real manufacturing or export industry.
One is the Heard and McDonald Islands in the Antarctic, also overseen by Australia, where there are no human inhabitants. No matter: As of Thursday, they face a 10 per cent tariff on exports to the US.
Even US manufacturers are at a loss
While the new tariffs are leaving many nations’ governments angered or bemused, they appear not to have support among US companies either.
“The new tariffs announced today will increase the cost of manufacturing products in America, threatening competitiveness and resulting in even higher prices for consumers,” said Mark Denzler, president & CEO of The Illinois Manufacturers’ Association (IMA). Illinois is the US’s fourth-largest manufacturing state.
“Rather than across-the-board tariffs, this tool should be used selectively to target countries cheating by dumping products, stealing intellectual property, or otherwise not following the rules,” he continued.
“Businesses need stability and predictability. Manufacturers encourage the President and Congress to focus on comprehensive growth policies, including federal tax relief, regulatory and permitting reform, unleashing our nation’s energy advantage, and building a skilled workforce. We remain committed to working in partnership with our member companies and federal officials to hold bad actors accountable while also allowing for manufacturing to flourish in Illinois and across the US.”
- Additional reporting by Reuters.
