Australian exports to tumble $30b as Trump's tariff war hits home
Australia is headed for a $27 billion collapse in income from two of its biggest exports – liquefied gas and iron ore – as Donald Trump's trade war with China deepens fears for the global economy and stifles demand for commodities.
The outlook for some of Australia's largest mining and energy companies has deteriorated since April, when the United States imposed across-the-board tariffs at much higher rates than many had been expecting, leading to increased uncertainty and lower global growth forecasts.
While Trump gave Australia the minimum baseline tariff rate of 10 per cent, the fallout for the country is expected to be wider-reaching as the biggest Asian buyers of Australia's natural resources, particularly China, face much higher US tariffs amid an already sluggish time for their economies.
'Rising trade barriers – and uncertainty over how high these barriers will settle – have disrupted trade between the US and its major partners and caused businesses and consumers to adopt a 'wait-and-see' approach,' the Department of Industry, Science and Resources says in its latest export forecast report, to be released on Monday.
'The associated uncertainty is likely to impinge on world commodity demand, as the nations that Australia supplies are impacted.'
Australia is the world's largest exporter of iron ore – the raw ingredient that is turned into steel in giant blast furnaces – and one of the top shippers of liquefied natural gas to countries in Asia that need the fuel to keep the lights on and to power their factories.
However, as prices continue easing, the revenue earned from those commodities is now projected to decline more sharply than the government had been expecting just three months ago: iron ore earnings are set to fall by $20 billion – from $116 billion to $96 billion – within two years, while LNG is on track to fall from $60 billion to $53 billion.
'The near-term outlook for Australian resources and energy exports has softened as rising trade barriers hurt the world economy,' the department says in the report.
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