The grim reality of what Trump’s savage tariff trade war could mean for Australia – and the impact it’s set to have on ALL families here
Aussies -Consumers could ultimately pay more for everyday goods, regardless of whether Donald Trump hits the rates on Australian products.
The new president of the United States has wasted little time to fulfill an election promise to impose the most penalty tax since 1930 – and he used executive orders to go faster than the last time he was in the White House.
Canada and Mexico have been beaten with 25 percent rates on goods that enter the US, either to reduce American production paths or to exert political pressure on border protection.
China has been hit by 10 percent rates, but they could rise even higher, since Trump campaigned to inflict a 60 percent rate on Chinese goods.
The Australian government hopes that the fact that the US has had a trade surplus with Australia, back to 1952, means that the second Trump administration Australia will give an exemption.
Thanks to the same logic, Australia received an exemption from 2018 25 percent rates for steel and 10 percent import load on aluminum.
The then coalition Prime Minister Malcolm Turnbull won the postponement when he pointed out when Australia bought more US goods than they bought from Down Under.
Seven years later, Labor -successor Anthony Albanese tries the same tactics in 2025.
Aussies could ultimately pay more for everyday goods, regardless of whether Donald Trump hits the rates on Australian products (the American president is depicted with Canadian Prime Minister Justin Trudeau)
Trump is obsessed with trade surpluses and if the author of the Art of the Deal expect analysts to continue to honor the free trade agreement in the US Australia that will come into effect in January 2005.
But this is what could happen with the third largest two -way trade partner in Australia in the coming weeks when the US is set about this deal – or maintains the current status quo.
1. Wides -spread American rates weaken the Australian dollar
The Australian dollar on Tuesday fell under 61 American cent for the first time in almost five years.
Even if Trump saves Australia from his rates, US import taxes have to stimulate the US dollar earlier, in turn weakens the Australian dollar.
That is because a weaker American demand for import, as a result of the rates, means that fewer American dollars are spent on imported goods. This results in less demand for foreign currencies.
This leads to a weaker Australian dollar, which only makes import such as cars and electric goods more expensive, regardless of where they are made in the world, because goods are often priced in American dollars in wholesalers – not to mention more expensive overseas holidays.
Moomoo market strategist Jessica Amir fears that the Australian dollar will sink below 60 American cents in the coming months and fall until levels until the last in March 2020 during the start of the Covid Pandemie.
“There is a lot of close pressure on the Aussie -Montage – that’s why the lows are usually tested,” she said Daily Mail Australia.
“There is a real sense of seriousness that the Aussie dollar could reach the lows of 2020.”

Moomoo market strategist Jessica Amir (photo) fears that the Australian dollar will sink under 60 American cents in the coming months and fall to levels that will be seen for the last time in March 2020 during the start of the Covid Pandemic
For consumers this means more expensive import, because wholesalers will be forced to pay more for things such as electronic equipment.
“Everything is much more expensive because the US dollar keeps climbing,” said Mrs. Amir.
‘The lower Aussie dollar is not very good for the average consumer, that is the reality.
“The costs of importing Australia will rise – JB Hi -Fi can be forced to increase the price they have to pay, simply because they pay a higher exchange rate and that is about the entire spectrum.”
2. Inflation remains higher, economic growth weakened
As Canada has demonstrated, countries will probably respond by American rates in kind, which leads to a trade war.
Components for goods are often imported and if parts cost more, the production costs are likely to rise.
Saxo Chief Macro strategist John J. Hardy said that trade wars would probably lead to higher inflation.

The Australian dollar has again fallen this week to a low -five -year low of 61 American cents and a stronger American dollar makes import more expensive
IF These tariff movements and counter -movements of American trading partners have risen, we are effective in a trade war with all the corresponding fall -out for growth and prices and disruptions to deliver chains and companies, “he said.
Mr. Hardy warned of weaker economic growth that took place at the same time as high inflation, so that the horrors of the late 1970s and early 1980s were revived when the world economy suffered from stagflation, or high unemployment and inflation.
‘How much the market loss continues to deteriorate -after a significant correction of perhaps a few percent on stock markets -depends on whether the new rates are quickly withdrawn because an agreement is reached, or whether this goes in a Tit -For -Tat cycle, “He said.
3. Reserve bench lowers the interest rates
Paradoxically, although more expensive import contributions to inflation, they also make the interest of the reserve bench more likely.
AMP Chief Economist Shane Oliver said this was because trade wars would also weaken economic activity.
That would make the possibility of a recession more likely than high inflation, although consumers pay more for goods.
“Trump’s trade war contributes to the case for an RBA interest rate reduction, because it is more a threat to Australian growth than inflation,” Dr. Oliver.
Mrs. Amir said that slow worldwide economic growth could see that the reserve bank reduced rates to increase economic activity, even if more expensive imports stops underlying inflation that fell the center of his goal from 2 to 3 percent.

Paradoxically, although more expensive import contributions to inflation, they also make the interest of the reserve bank more likely (RBA Governor Michele Bullock is rba)
“Markets tell us that we adapt for a painful adjustment for slower, global economic growth,” she said.
“Of course, the RBA will seriously consider what that means for the interest process.”
Financial markets expect an RBA rate reduction to be followed in 2025 on 18 February.
4. China dumps goods on Australia, Ai War is rising
China, the largest trading partner in Australia, could eventually dump produced goods such as electric cars on Australia to bypass those American rates.
This could see a stream of Chinese cars from BYD and Great Wall Motors.
That in turn could lower the prices, since Australia also has a bilateral free trade agreement with China, which means that goods do not draw up import tax there.
“Byd already has the cheapest EV in Australia – they actually benefit from people like you and me, making EVs more accessible,” she said.

China, the largest trading partner in Australia, could eventually dump produced goods such as electric cars on Australia to bypass those American rates (depicted by BYD dolphins)

Treasurer Jim Chalmers argued the fact that the Americans had a trade surplus with the US who could see returning until 1952
Mrs. Amir said that this would mean more demand for copper and lithium used to feed computers and batteries of electric vehicles.
This can possibly benefit lithium miners such as Pilbara Minerals, Liontown and Rio Tinto or copper producer BHP.
It is also because the world’s economic and military super powers are concerned with an AI race, with Chinese start-up deeper that shows that artificial intelligence could develop at lower costs than its American competitors such as Chatgpt.
“AI is going to be much cheaper for the average company to assume and that means we need many more sources, such as the most important metals to make these chips, but also to build our data centers,” she said.
5. Australian exporters
The US is the third largest trading partner in Australia after China and Japan.
Beef, precious metals, medicines, aluminum, aircraft parts and wine are the largest exports from Australia to the US.
Dr. Oliver pointed to export to the US made only four percent of Australia’s total exports, but was still vulnerable.
“Australia has a trade deficit in the US, but they can still be hit if Trump’s motivation is mainly to shift production back to the US and increase tax revenues,” he said.
Treasurer Jim Chalmers argued the fact that the Americans had a trade surplus with the US who could see Australia saving back until 1952.
“It is not surprised, but we are convinced that we can navigate this new policy that comes from the US,” Dr. Chalmers on Tuesday to reporters.
‘We are well placed and we are well prepared to tackle these developments.
“We also have a very different economic relationship with the US than some of the countries that have been focused in the last days.”
The trade surplus of the American goods with Australia was $ 17.7 billion in 2023.
“The Americans have a very substantial trade surplus with us,” said Dr. Chalmers.