This week the U.S.A. announced sweeping new tariffs on most countries’ goods, including Australian exports. This tariff eliminates all previous exemptions for free trade, including those for Australia.

But will these impact Australian businesses and industries?

What Are the New Tariffs?
10% tariff on all Australian (most) exports, excluding steel and aluminium which are 25%. 

General Impact
The single biggest effect of the new tariffs is potential of retaliatory tariffs, creating a spiral of trade distortion and disruption. Canada and China have already retaliated with their own new tariffs. We don’t know how this will impact our major trading partners, with recession a possibility in the USA. 

In addition, there is a risk the tariffs will lead to an influx of foreign products to Australia, which were originally bound for the USA, flood the local market and displacing local manufacturing.

Exporters will face issues selling products into the USA, as they are cost 10% more, so may expect push back on pricing. 

Positives
Many countries had much larger tariffs imposed, China 34%, Vietnam 46% and India 26%.  Australia could see increased trade with Indo-Pacific partners due to trade diversion effects. “Trade diversion works in both directions. That tariffs will increase foreign goods coming into Australia but also increase demand for Australian goods by countries that are putting retaliatory tariffs on US goods.

Australia already has trade agreements in place with many local countries, so trade would be expected to increase. If China imposes high tariffs on US products, then that opens doors for Australian producers, as the Chinese importers will look to substitute away from the US products.

Top Exports to the USA 2023/24
Professional, tech and other business services    $6.2 billon 
IP charges                                                             $3.5 billion 
Beef fresh, chilled and frozen                                $3.3 billion 
Recreational travel                                                 $2 billion 
Gold                                                                       $1.7 billion 
Pharma products                                                   $1.6 billion 

Source https://www.abc.net.au/news/2025-04-04/us-tariffs-what-does-australia-export-trade-data/105045224

Industries Impacted

Certain industries will feel the impact more than others. Let’s take a look at the sectors most exposed to these new tariffs.

1. Agriculture and Beef
Australia is known for its high-quality beef, and the U.S. is a major market for Australian cattle, with about 30% of beef exports to mainly the East Coast. The 10% tariff will lead to higher prices for American consumers, particularly in fast food chains and restaurants that rely on lean Australian beef to use in hamburger patties. 

2. Manufacturing and Resources
Manufacturing industries like steel and aluminium have been hit with a 25% tariff.  The value of steel and aluminium exported to the US in 2023 was less than A$1 billion. 

While the baseline tariff on Australian exports is across the board, certain minerals may be exempt, with further clarification from the Trump Administration required. The tariff edict states that copper, pharmaceuticals, semiconductors, bullion, and lumber articles will be exempt, as well as “energy and other certain minerals that are not available in the United States”, which is likely to include a range of critical minerals and uranium.

As mentioned, exporters could speak to their industry group to potentially look at neighbouring countries that have also had tariffs imposed.  
The Bigger Picture: Indirect Effects on Australian SMEs
While the direct impact of the 10% tariff is manageable for many, there are indirect effects that could hit Australian SMEs hard. One example is supply chain disruptions. As the U.S. increases tariffs on goods from countries like China and Europe, the ripple effect can drive up costs globally, including for Australian businesses that rely on overseas suppliers.

For SMEs, this might be a wake-up call to diversify their customer base and reduce dependency on any single market. By looking beyond the U.S. and adapting their strategies, Australian businesses can not only survive but potentially thrive in the new trade environment.

Managing the Risks from the Tariffs
Talk to your insurance adviser if you are looking to change your export markets or suppliers, your insurances covers will need to be reviewed and updated to ensure continued cover.  

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