Australia Still Hit by Trump Tariffs Despite Trade Deficit with US

JAKARTA, KOMPAS – Australia has not escaped the blow of steel and aluminum import tariffs by United States President Donald Trump. This is an opportunity for Indonesia and Australia to further strengthen economic cooperation to ensure the continued growth of both countries.

This was stated by Australian Business Ambassador to Indonesia Jennifer Westacott in Jakarta, Tuesday (11/2/2025). This is Westacott's second visit to Indonesia. This time she brought 39 representatives of Australian companies to build two-way economic and investment cooperation with Indonesia.

"The key to dealing with Trump's threat of tariffs is the ability to negotiate with him. In Trump's previous term (2017-2021), Indonesia and Australia were able to do that," Westacott said.

Apart from negotiating with Trump, Westacott stressed the importance of enhancing two-way economic and investment cooperation between Indonesia and Australia. Diversification of investment sectors will advance the economies of both countries and strengthen development resilience.

Trump announced Tuesday in Washington, D.C., that he was imposing 25 percent tariffs on steel and aluminum imports, regardless of whether they come from allies or adversaries. Australia is a major exporter of steel and aluminum to the United States.

In response to the tariffs, Australian Prime Minister Anthony Albanese immediately called Trump.

Trump initially announced he was considering excluding Australia from the tariffs, citing a higher ratio of U.S. exports to Australia than imports.

“In the US-Australia trade balance, the US has a surplus so we don't need to put tariffs on them,” Trump said.

Albanese in Canberra confirmed Trump's remarks, but stressed that Australia was monitoring the US to ensure it kept its promise.

However, Australian national media, SBS, at 16:00 WIB reported that Australia was also hit with tariffs by Trump. Australian Industry Group Chair, Ines Willox said, Trump's tariffs were like a slap in the face.

Economic observers have criticized Trump's policies because he uses tariffs as a weapon to solve all problems.

If we observe the development of this tariff issue, it seems that there are at least three uses of tariffs by Trump. First, he uses it as a political weapon to pressure. This is seen from the tariffs imposed on Canada and Mexico, the US's direct neighbors who are bound by the North American free trade agreement.

The tariffs were later suspended for 30 days, following separate negotiations with Canada and Mexico. In essence, Trump wanted Canada and Mexico to increase surveillance at their respective borders with the US to prevent the smuggling of illegal immigrants and fentanyl.

The second use is to cover the US trade deficit. Trump always complains that the US imports too many goods from abroad. Conversely, too few US goods are exported. There are also countries that set higher import tariffs on US products than tariffs in the US.

An example is the European Union. This bloc sets a 10 percent tariff on vehicles imported from the US. In contrast, the US only sets a 2.5 percent tariff on European cars entering “Uncle Sam’s Country”. As a result, Trump hopes that the US can cover the shortfall in export revenue by imposing this retaliatory tariff.

The third goal is to protect certain commodities that the US considers strategic. Trump is pushing, in commodities including steel and aluminum, for foreign companies to choose to invest in the US.

India and Thailand, which were also targeted by Trump's tariffs, have chosen to take precautionary measures. They have announced they will buy more US products. India has even promised to buy US defense equipment and jointly develop certain defense equipment.

"The dynamics of international trade will change. More and more countries will see the US as an unreliable partner, and they will shift their supply chains away from the US. As a result, the US's prestige and influence in the world will decline," said Maurice Obstfeld, a researcher at the Peterson Institute of National Economics, US. (AFP)