Background: Donald Trump implemented global tariffs in April last year, hitting countries like India (50%), China (over 100% at one stage), and Australia (10%). These tariffs generated more than $130 billion USD in revenue for the US.

What happened: Last week, the US Supreme Court ruled Trump’s global tariffs unconstitutional. In response, Trump announced plans to raise the global import tariff rate from 10% to 15% across the board. The announcement caused concern among governments and businesses, as some countries, including Australia, lose the relative advantage they previously had.

What else: While some countries are better positioned, Australia now faces the same rate as other countries, removing last year’s competitive edge.

What's the key learning

💡In global trade, sometimes it’s not about being the cheapest… it’s about being less expensive than everyone else. Australia’s “10% tariff club” advantage helped drive a 19% lift in exports to the US last year, particularly in beef, aircraft components, and medical instruments.

💡With the new 15% rate for all countries, Australia loses its relative edge. And while some industries will hope for carve-outs from broad tariffs, at this stage, the exemptions appear unlikely.

💡So for Australian businesses, it means that they need to adjust to a more level (but less advantageous) global playing field...assuming this new tariff gets passed.