First Xi, now Trump: tariff impacts on the Australian economy
Tim Harcourt, Industry Professor & Chief Economist at the University of Technology Sydney (UTS) Institute for Public Policy and Governance, is available to comment on tariff impacts on the Australian economy.
12 March 2025
Professor Tim Harcourt
Industry Professor & Chief Economist
Institute for Public Policy and Governance (IPPG)
Centre for Sport, Business and Society (CSBS)
University of Technology Sydney (UTS)
“First, the tariffs from China hit Australian exporters, now it’s the Trump tariffs on steel and aluminium – and as we have just learnt there will be no exemption. How will these measures affect the USA, but also China, Australia and the rest of the global economy? Like the China COVID tariffs, the Trump tariffs will hurt Australian workers.
“After all, 1 in 5 Australian workers depend on exporters and exporters pay 60 per cent higher wages on average than non-exporters in union jobs with EBAs. This will be bad for the steel workers of the Illawarra and the aluminium workers of Portland, and will also be inflationary, and put upward pressure on interest rates. That’s why we have seen the impact of tariff decisions (and tariff uncertainty) hitting the Australian share market and superannuation balances.
“Of course, Australia is not alone. Closest trading partner Canada is in the same boat, as is Mexico. Canada has just had a leadership election with former Bank of Canada Governor Mark Carney (who was also Bank of England Governor) taking over as Prime Minister of Canada from Justin Trudeau.
The Canadian Tories led by Pierre Poilievre are going to paint Carney as a globalist, more comfortable in Switzerland than Saskatoon, but the tariffs on Canada give the new Prime Minister a chance to wrap himself in the Maple Leaf and fight the Trump tariffs. Carney can also paint Poilievre as Trump lite, and improve the Liberals chances in a contest suffering from the unpopularity of Trudeau. When a central banker can replace a charismatic second-generation politician as Prime Minister and have a better chance, we know we are living in interesting times.
“With China and the USA unreliable trade partners, what options does Australia have? The Albanese Labor government, to their credit, have improved relations with our Northeast Asian trading partners like Japan and South Korea, Taiwan, ASEAN (with the special Australia ASEAN summit in Melbourne last year) as well as Europe and the emerging markets of the Middle East and North Africa (MENA) and Latin America.
“We could actually get closer to Canada under their new Prime Minister, given our similar economic and political backgrounds (if not geography) and current situation on steel and aluminium tariffs. Canada has also had its issues with Beijing as well as Washington.
“So forget the tyranny of distance, and May the Moose be with you.”
