Trade minister warns tariffs, which Coalition last year claimed to have secured an exemption from, could lead to recession

This article is more than 2 years old

This article is more than 2 years old

The Turnbull government admits it has no idea if Australia will be exempt from US president Donald Trump’s tariffs on steel and aluminium imports, despite claiming last year that it would escape the levies.

Ministers have warned that the tariffs could spark a trade war and lead to global recession, and say Australian officials are scrambling to learn the details of the plan.

World stock markets tumbled on Friday after Trump announced he would next week impose tariffs of 25% on steel imports and 10% on imported aluminium, in an attempt to shield local manufacturers from global competition.

Steel and aluminum tariffs trigger sharp stock market sell-off in US and Asia Read more

Steve Ciobo, the Australian minister for trade, held a press conference on Friday to voice his concerns, warning the tariffs could lead to a breakdown in trade relations.

“As you would all be aware, we have been pursuing this issue amid rumours about a possible imposition of action like this for some time,” he said.

“Only last week, the prime minister and I had the opportunity to raise this matter directly with the president and other senior members of the Trump administration to indicate that Australia’s view is that there should be an exemption for Australian steel and aluminium products.

“The imposition of a tariff like this will do nothing other than distort trade and ultimately we believe will lead to a loss of jobs.

“BlueScope Steel, which has operations on the west coast of the United States, employs 3,000 people in California and Washington state, and their activities would be affected.

“At this point in time, we don’t have clarity from the administration on whether an exemption will be in place for Australia.

“It will be a unilateral imposition of tariffs across the board. I put the call through to the US commerce secretary and have requested ... to speak as soon as possible to go through the detail of this announcement.

He also warned that Trumps’s tariffs could lead to retaliatory action from other countries, and that could lead to recession.

“If we see a breakout of action and reaction from major economies, the only thing that will arise from that will be a slowdown in economic growth and, over time, if that got bad enough, we could see a recession,” he said.

He said the US and Australia had a “very strong bond” and he hoped the two countries could come to an agreement.

In July last year, the Turnbull government claimed that it had secured an exemption from such tariffs.

At the time, it said the exemption would protect Australia’s US$130m steel exports to the US and its $62.5m aluminium exports to the US. It would also protect the interests of BlueScope, the sole exporter of Australian steel.

But on Friday, Ciobo downplayed the importance of the US market for Australian exporters.

“We should not lose sight of the fact that our steel and aluminium exports only account for a very small percentage of the US import market,” he said.

“In terms of Australia’s steel exports, they account for about 0.8%, aluminium for about 1.5%. They are very modest.”