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The next round in the trade war in the USA may be more harmful to Australia
Mar
On April 2, the United States is to implement a fresh wave of tariffs as part of it Righteous and mutual commercial plan. The details of the plan that will affect all American trading partners are not yet known, but the US administration suggested that these tariffs will be focused on all rules that “considers”unjust“.
This means that the tariffs of April 2 may be aimed at a number of national national policies, such as biological safety rules regulating food imports, and a government pharmaceutical benefits program (PBS).
The size of the hit is uncertain. One report Indicates that a relatively petite tariff between 2% and 8% is being considered, below 25% of the rate applied to steel and aluminum on March 12. But it will apply to a much larger export set.
Read more: With Australian steel and aluminum to bear the US tariffs, global uncertainty will be our next challenge
Australia and the USA have been allies for over a century. Two nations celebrated “accompanying age“In 2018, both countries have more formally free trade agreement, Australia-UNITED (AUSFTA) free trade agreement.
The agreement was negotiated in good faith and entered into force on January 1, 2005. She called to eliminate tariffs between two nations in time and until now both sides maintained their occasions. The so -called “mutual” tariff plan would violate this contract.
What sectors will probably be attacked?
The reference to Trump to invigoic barriers raises two main concerns about Australian products: meat and pharmaceuticals.
These exports to the USA are worth $ 3.3 billion and $ 1.6 billion a year appropriately. It’s about five times than the total value of our exports of steel and aluminum to the USA.
In Australia, domestic beef products are subject to strict identification principles. Similarly imported beef has immovable biological safety requirements because it is classified as high risk food.
This is due to the potential risk of a crazy cow disease (cattle sponge encephalopathy). This The disease has been detected In the United States in 2002 and caused the Australian ban on beef products in the USA.
The ban was partially abolished in 2018, but there are some restrictions that according to the USA are trade barrier. It was also raised by the Biden administration in 2024 Report on trade barriers.
The United States cannot force Australia to change the regulations based on tariffs – but they can make products from Australian suppliers more high-priced, and thus limit access to the market to the US, which included many Australian producers.
The tariff for Australian beef products would also bring the prices of American consumers. Trade Minister Don Farrell warned the price McDonald’s Burger may increase.
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Drugs are also in the fire line
Turning to pharmaceuticals, Australian PBS has been a point between US and Australian negations for 20 years.
PBS, which has existed since 1948, ensures that Australians have inexpensive access to necessary drugs. This was part of the discussion during free trade negotiations and was raised as a potential trade barrier.
The United States argue that innovations and unlimited market access for American pharmaceutical companies should be priority over the arrangements regarding Australia’s reference valuation. Reference prices mean that drugs with similar results should have similar prices.
The reason for the US have a problem with this program is that some of their companies are not able to download higher medicine prices.
Although these are the categories of the most fear, it is not certain that the “fair and mutual plan” will be confined to beef and pharmaceuticals.
For example, there are no barriers applied to the import of wine to Australia. But there were some fears of the tariff that can be introduced independently.
Wine is often a goal Trade wars And President Donald Trump threatened the European Union Tariff 200% For all wine and spirits entering the USA. Because Australian wine producers have only recently recovered from the Chinese and Canadian tariff, every American tariffs would deal a strict blow to the industry.
The elderly clip of the former republican president Ronald Reagan became viral this week, emphasizing his completely different view:
Is there any way to appeal?
There is one thing that is clear about these tariffs. Their application will be violating both WTO rules and free trade agreement.
Both have regulations regarding dispute settlement, and Australia has options for submitting complaints. However, the rule of law and existing standards of international order do not seem to convince Trump’s administration.
Despite this, it is crucial to notice that the United States cannot force Australia to change their long -term regulations that protect consumers and provide availability of drugs. This is the choice of the Australian government.
If the tariffs are introduced in the range of 2% to 8%, it may not have a significant direct economic impact. But they will have different consequences. Trade negotiations and international agreements are largely based on good will. These acts of the United States will erod much of what has been built over the past century.
. We see the slowdown He has been rejected by Trump’s administration on the financial markets if necessary. But if the correction turns into an accident, it may stop President Trump. Given his lack of interest in negotiating, this may be the only thing that can change his opinion.
