Hope for tariff carve-out wanes as US President Donald Trump strikes deals

7NEWS

2 days ago

Australia's hopes for a total tariff exemption are dwindling as Donald Trump's deals with other nations lay bare the limits of trade negotiations.
Since pushing his tariff deadline to August 1, the US president has struck trade agreements with Japan, and on Monday, the European Union.
While the deals landed on tariffs lower than Mr Trump's initial threats, both were higher than the 10 per cent baseline levy imposed on Australian goods.
No US trading partner has managed to completely dodge tariffs on their items.
Prime Minister Anthony Albanese and Trade Minister Don Farrell have maintained that Australian products should not be hit with any tariffs, but the latest deals show an exemption could be off the table.
Overnight, Mr Trump implied the 10 per cent base rate, which applies to the goods of many countries including Australia, could rise to 15-20 per cent.
Mr Trump said in Scotland that his administration will notify about 200 countries soon of their new 'world tariff' rate.
'I would say it'll be somewhere in the 15 to 20 per cent range,' he said. 'Probably one of those two numbers.'
University of Sydney US politics expert David Smith told AAP it's proving hard for countries to talk their way out of tariffs on their exports to the US.
'Trump really does see tariffs as something that is good in themselves,' University of Sydney US politics expert David Smith told AAP.
'Even though there were a lot of hopes at the beginning of this process that countries could negotiate their way out of tariffs altogether - that's not really happening.'
Australia, like other nations, might instead have to pivot approaches and try to strategically position its industries within these deals.
For example, the US pharmaceutical sector has long taken issue with Australia's drug subsidy scheme and urged the president to act.
In early July, Mr Trump threatened a 200 per cent tariff on pharmaceuticals, which could be seen as a way for the US to chip away at the Pharmaceutical Benefits Scheme in exchange for a trade deal.
Both of Australia's major parties have maintained the program is not up for negotiation.
Instead, the federal government revealed it would lift restrictions on certain US beef imports.
'Australia is thinking about other areas where we would be prepared to make concessions, because we were not going to be making concessions on (the PBS),' Associate Professor Smith said.
Mr Albanese says the government is engaging in Australia's national interest.
While the government said its decision to lift restrictions followed a decade-long scientific review and noted the measure would not compromise biosecurity, the opposition and figures within the cattle industry have called for an independent examination of the issue.
'If we have created a brand new threat, we should be very clear about that,' Liberal senator Jane Hume told parliament.