WEBVTT - The real impact of Trump’s tariffs on Australia

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<v Speaker 1>From Schwartz Media. I'm Daniel James. This is seven am.

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<v Speaker 1>Donald Trump's trade war is escalating as his wide ranging

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<v Speaker 1>tariffs take effect. Australia had hopes to avoid a twenty

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<v Speaker 1>five percent tariff on our steel and aluminum, but we

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<v Speaker 1>now know there will be no exemptions. While Canada and

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<v Speaker 1>the EU are retaliating. Anthony Albanesi's focus is on trying

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<v Speaker 1>to stem the damage by arguing that other large industries

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<v Speaker 1>that would impact the Australian economy much more should be immune.

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<v Speaker 1>But as Trump gets more aggressive, his decisions on trade

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<v Speaker 1>could spill into every aspect of our alliance. Today, Managing

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<v Speaker 1>editor of the Saturday Paper, Emily Barrett on what the

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<v Speaker 1>tariffs mean for the Australian economy and what the government

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<v Speaker 1>can do about it. It's Friday, March fourteen. Emily. Trump's

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<v Speaker 1>tariffs on Australian steel and aluminum have just come into effect.

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<v Speaker 1>We've heard a lot recently about the government's efforts to

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<v Speaker 1>avoid them. So what if you made of Anthony Alberaneese's

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<v Speaker 1>response to the news.

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<v Speaker 2>Up until this moment, we know that Albenizi has been

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<v Speaker 2>trying to avoid providing what he callses running commentary on

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<v Speaker 2>the Trump administration's decisions. But this moment marks a big

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<v Speaker 2>change because it has an impact and a very direct

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<v Speaker 2>impact on Australia's interests.

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<v Speaker 3>The United States decision to impose tariffs on Australian steel

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<v Speaker 3>and our uminium as part of a global decision are

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<v Speaker 3>concerning it has.

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<v Speaker 2>Been and he's described as we've all heard, the decision

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<v Speaker 2>is entirely unjustified.

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<v Speaker 3>This is against the spirit about two nations enduring friendship

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<v Speaker 3>and fundamentally at odds with the benefits that our economic

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<v Speaker 3>partnership has delivered over more than seventy years.

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<v Speaker 2>Albanzi hasn't seen up until till now, obviously any benefit

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<v Speaker 2>in criticizing Trump, and that's partly because nobody wants to

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<v Speaker 2>poke this particular bear. You know, the US is the

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<v Speaker 2>world's largest economy. We have a very strong and close relationship.

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<v Speaker 2>But as more countries are taking what at least looks

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<v Speaker 2>like principled stances against Trump, voters have been responding pretty positively.

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<v Speaker 2>We've certainly seen this in Canada, right with Mark Karney.

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<v Speaker 2>It's easy to think that there might be a tipping

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<v Speaker 2>point where the consensus, whether it's supported within the US

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<v Speaker 2>or not a sort of a global consensus will become

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<v Speaker 2>more openly critical of the US as a superpower because

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<v Speaker 2>its policies now are sort of they're proving destructive economically

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<v Speaker 2>and as we're seeing geopolitically.

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<v Speaker 1>Well, let's talk about these tariffs twenty five percent on

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<v Speaker 1>steel and aluminium. How much of an impact will I have?

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<v Speaker 2>Yeah, this is easy to overstate. It's something that Albineze

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<v Speaker 2>has pointed out that this is actually not a large

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<v Speaker 2>amount of our exports.

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<v Speaker 3>Australian still and aluminium exports to the United States represent

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<v Speaker 3>less than zero point two two percent of the total

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<v Speaker 3>value of our exports. Neither is in the top ten

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<v Speaker 3>of what Australia sells to the United States.

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<v Speaker 2>Our markets in South Korea and Japan and other parts

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<v Speaker 2>of Asia are much much larger, so we could sell

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<v Speaker 2>more to those sorts of markets, to those consumers. So,

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<v Speaker 2>just as a sort of thought exercise here we contrast

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<v Speaker 2>this with what happened with Chinese tariffs in twenty twenty,

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<v Speaker 2>after Scott Morrison started saying that we should investigate the

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<v Speaker 2>outbreak of COVID nineteen. China is by far our biggest

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<v Speaker 2>trading partner. Those tariffs applied to coal, agricultural products, cotton, lamb, lobs, timber,

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<v Speaker 2>and wine. So the amounts were massive. That ranged from

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<v Speaker 2>forty percent on cotton to more than two hundred percent

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<v Speaker 2>on wine, and those tarrafts were in place for three

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<v Speaker 2>to four years. That's a big impact. That's extensive damage. So,

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<v Speaker 2>you know, this is particularly interesting given that we've seen

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<v Speaker 2>Peter Dutton going very hard on this as a political issue,

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<v Speaker 2>despite the fact that you know, we've just come through

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<v Speaker 2>this far more damaging trade war with China.

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<v Speaker 1>So these tariffs on steel and aluminium might not be

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<v Speaker 1>as significant as some we've seen before, but we know

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<v Speaker 1>the government had been trying to get out of them nonetheless,

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<v Speaker 1>so why didn't we get an exemption as hoped?

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<v Speaker 2>Yeah, So Trump had said, as we know that he

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<v Speaker 2>was he would consider excluding Australia from the twenty five

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<v Speaker 2>percent tariffs after that conversation that he had with Albanezi,

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<v Speaker 2>but his spokesperson Caroline Levitt, said that he considered it

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<v Speaker 2>and he considered against it, so there'll be no exemptions.

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<v Speaker 2>Caroline Levitt says the decision has been made to put

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<v Speaker 2>America's steel first, and Australia is welcome to move its

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<v Speaker 2>still manufacturers to the United States blue scope. We have

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<v Speaker 2>to keep in mind who's advising Trump here. His senior

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<v Speaker 2>counselor on trade and manufacturing as Pitter Navarro. He's an

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<v Speaker 2>extremist in terms of his economic view of the benefits

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<v Speaker 2>of tariffs. He's a real outlier, and he's an aggressive

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<v Speaker 2>hawk on China. He was actually sanctioned by China after

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<v Speaker 2>the first Trump administration and he believes that exemptions from

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<v Speaker 2>tariffs under that administration were what made the strategy fail.

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<v Speaker 2>And it clearly did fail when you consider the trade

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<v Speaker 2>deficit certainly wasn't corrected and the budget wasn't repaired.

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<v Speaker 4>The Biden administration was over three hundred thousand product exclusions

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<v Speaker 4>and virtually every country got it some kind of exemption

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<v Speaker 4>from that, and it took us back down.

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<v Speaker 2>Yeah, so we know that our government nevertheless doesn't want

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<v Speaker 2>this on its watch, and it has been working on

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<v Speaker 2>this constantly. There have been efforts by Trade Minister Don Farrell,

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<v Speaker 2>Foreign Minister Penny Wong, Treasurer Jim Chalmers. They've all been

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<v Speaker 2>on recent trips to the US and Albinizi obviously had

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<v Speaker 2>his call with Trump, and we've heard a lot about

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<v Speaker 2>the fact that Australia has a trade deficit with the US.

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<v Speaker 2>But the lack of a trade deficit isn't the reason

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<v Speaker 2>that we weren't exempted. It has more to do with

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<v Speaker 2>the fact that America really had decided that it was

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<v Speaker 2>going to you this blanket policy in order to see

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<v Speaker 2>it succeed. And while our industry for steel and animinium

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<v Speaker 2>will be able to weather this, the bigger effect for

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<v Speaker 2>Australia is the fact that Trump's really aggressive use of

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<v Speaker 2>tariffs across the board, if it keeps up, will hurt

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<v Speaker 2>the US economy and it will hurt the global economy.

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<v Speaker 1>Coming up after the break, is America headed for a recession?

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<v Speaker 1>And what will that mean for US?

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<v Speaker 1>Emily, Donald Trump has been announcing and reversing tariff's slefs,

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<v Speaker 1>RAT and Center. How is he using them as a

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<v Speaker 1>tool and what's he trying to achieve.

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<v Speaker 2>Yeah, we actually need a tracker on this because Trump's

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<v Speaker 2>application of this policy is really erratic, and by the

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<v Speaker 2>time this airs, you know, things could have changed again

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<v Speaker 2>because he seems to have created this pattern of stepping

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<v Speaker 2>up tariff stepping off them. It's creating radical uncertainty, and

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<v Speaker 2>one thing that we know that markets don't like is

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<v Speaker 2>uncertainty because that makes it difficult to plan investments in

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<v Speaker 2>large projects, the kinds of things that actually create growth.

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<v Speaker 6>The stock market in freefall again today, opening more than

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<v Speaker 6>fifty points down and sliding even further after the President

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<v Speaker 6>announced increased tariffs on Canada. The market's plunging Monday.

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<v Speaker 2>That is one point in which this is being counterproductive

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<v Speaker 2>so far. What we're seeing from Trump is that he's

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<v Speaker 2>primarily targeted the US's closest allies with tariffs. So Canada

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<v Speaker 2>has twenty five percent on most imports, although it's a

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<v Speaker 2>lower rate on energy. Mexico has twenty five percent also

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<v Speaker 2>on all imports. It's all aluminium and steel. As we

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<v Speaker 2>know now, is it twenty five percent, and there are

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<v Speaker 2>further levies that are supposed to take effect at the

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<v Speaker 2>beginning of April on agricultural products and foreign cars. So

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<v Speaker 2>and in February, if we look at what he's done

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<v Speaker 2>with China, he imposed ten percent tariff and that's been

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<v Speaker 2>up to another ten percent this month. So ultimately, what

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<v Speaker 2>Trump loves about tariffs is that it's a weapon that

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<v Speaker 2>he can wield without having to go to Congress, purely

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<v Speaker 2>by executive order. So it's essentially his power. So Trump

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<v Speaker 2>has framed the tariffs as a way to sort of

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<v Speaker 2>protect American industry and create jobs and bring back manufacturing

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<v Speaker 2>industries in the US. That's where he sees as kind

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<v Speaker 2>of the seat of American strength.

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<v Speaker 1>So the idea of bringing back manufacturing jobs to the

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<v Speaker 1>US is a worthwhile goal on the surface, and one

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<v Speaker 1>that millions of Americans we're voting for when they voted

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<v Speaker 1>for Trump. So what are the chances of that actually working.

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<v Speaker 2>Manufacturing entirely in America across many industries is simply more costs,

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<v Speaker 2>wages are higher in the US now, a lot of

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<v Speaker 2>these industries are less competitive globally than they actually need

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<v Speaker 2>to be if they want to supply their own needs,

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<v Speaker 2>and they rely heavily on cheaper inputs from elsewhere in

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<v Speaker 2>the world. Manufacturing is really capital intensive. It takes more

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<v Speaker 2>than tariffs also to fix it. If you look at

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<v Speaker 2>the trajectory of manufacturing in the US, over decades, jobs

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<v Speaker 2>for manufacturing as a sheriff total employment went from about

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<v Speaker 2>thirty percent in the seventies to just over eight percent. Now,

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<v Speaker 2>the bigger question really is whether this is actually the

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<v Speaker 2>future that American needs. There are ways in which Biden

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<v Speaker 2>was trying to sort of configure a manufacturing future for

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<v Speaker 2>America that was based around the Green Transition, so that's

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<v Speaker 2>where you could get more high skilled and low schooled

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<v Speaker 2>jobs pulling into this kind of grand project. He saw

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<v Speaker 2>subsidies and sort of government support as being useful for this.

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<v Speaker 2>These were legislated under the Inflation Reduction Act, and that's

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<v Speaker 2>a national project that was already underway and it was

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<v Speaker 2>full of jobs. Now what Trump wants to do is

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<v Speaker 2>trash that Inflation Reduction Act. He wants to wield big tariffs.

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<v Speaker 2>He's taking America essentially back to a failed project of

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<v Speaker 2>sort of the nineteen thirties, and that actually deepened the

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<v Speaker 2>Great Depression. It wasn't a successful strategy the first time round.

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<v Speaker 2>But interestingly, the way he sold tariffs to people. You

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<v Speaker 2>know that not a lot of people are very persuaded

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<v Speaker 2>by the effectiveness of tariffs, and for good reason. But

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<v Speaker 2>the way he's sold it is by saying that they'll

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<v Speaker 2>make the US a lot of money. He seems to

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<v Speaker 2>think that this is going to correct the country's trade

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<v Speaker 2>deficit and help with its budget, and neither of these

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<v Speaker 2>things are true. Levies on tariffs are not paid by exporters.

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<v Speaker 2>They're paid by importers who tend to pass them on

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<v Speaker 2>to consumers wherever they can, so they raise prices in

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<v Speaker 2>the country that imposes them, and that in turn is inflationary,

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<v Speaker 2>and coupled with a slowing economy, we could see stagflesh,

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<v Speaker 2>which is when inflation is rising but growth is slowing.

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<v Speaker 2>We now have Trump actually refusing to rule out a

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<v Speaker 2>recession for the US. He went on Fox News, which

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<v Speaker 2>was interesting earlier this week, saying that the economy will

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<v Speaker 2>get worse before it gets better.

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<v Speaker 7>Are you expecting a reception this year? I hate to

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<v Speaker 7>predict things like that. There is a period of transition

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<v Speaker 7>because what we're doing is very big We're bringing wealth

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<v Speaker 7>back to America. That's a big thing, and there are

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<v Speaker 7>always periods of it takes a little time. It takes

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<v Speaker 7>a little time, but I think it should be great

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<v Speaker 7>for US. I mean, I think it should be great.

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<v Speaker 1>So how significant is that to hear Trump preparing Americans

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<v Speaker 1>for a potential recession.

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<v Speaker 2>It's very significant. This is not going to be a

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<v Speaker 2>popular thing, and Trump loves to protect his popularity, but

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<v Speaker 2>he's clearly got to say something about the fact that

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<v Speaker 2>all of Wall Street is downgrading their growth forecasts. Markets

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<v Speaker 2>are sliding, and we've seen the worst declines in markets

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<v Speaker 2>actually since the height of the inflation surgeon in twenty

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<v Speaker 2>twenty two.

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<v Speaker 1>And if America does go into recession, affect Australia.

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<v Speaker 2>So when the world's largest economy suffers, so does everyone else.

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<v Speaker 2>To an extent, our markets do tend to follow the US,

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<v Speaker 2>so we have seen declines here. And of course then

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<v Speaker 2>there's the risk of more tariffs if the US chose

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<v Speaker 2>to target our pharmaceutical products. Those are bigger for US

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<v Speaker 2>than aluminium and steel. Certainly, it's important though, to remember

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<v Speaker 2>that Australia's fortunes are pretty dependent on our nearest neighbors

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<v Speaker 2>in Asia and on the strength of our own economy,

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<v Speaker 2>so we've weathered American storms before. In the in the

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<v Speaker 2>global financial crisis, we didn't have a recession that was

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<v Speaker 2>really we were a rare country to escape, but that's

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<v Speaker 2>because the government offered enough stimulus to support people and

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<v Speaker 2>the central Bank was able to cut interest rates when

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<v Speaker 2>it needed to.

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<v Speaker 1>So emily. With all of that in mind, what can

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<v Speaker 1>the government do to protect their economy from the worst

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<v Speaker 1>of it?

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<v Speaker 2>Right, So, when it comes to dealing with tariffs, Australia

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<v Speaker 2>has historically favored this diplomatic negotiation over retaliatory trade measures.

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<v Speaker 2>We know they don't work if you look at the

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<v Speaker 2>way that we dealt with the Chinese government when it

0:13:01.679 --> 0:13:04.480
<v Speaker 2>applied those tariffs up to two hundred and eighteen percent

0:13:04.520 --> 0:13:07.959
<v Speaker 2>on Australian wine. The government sought a diplomatic solution rather

0:13:08.040 --> 0:13:10.439
<v Speaker 2>than a broader trade war, and that ultimately did work

0:13:10.480 --> 0:13:13.439
<v Speaker 2>out for us after some pain. We know that negotiations

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<v Speaker 2>also are still ongoing. So Penny Wong has said that

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<v Speaker 2>we could use our critical minerals, of which we have

0:13:18.559 --> 0:13:21.760
<v Speaker 2>vast supplies, as a sort of a bargaining chip. So

0:13:21.800 --> 0:13:24.960
<v Speaker 2>we're not without some leverage. We're very unlikely to see

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<v Speaker 2>our government retaliate with counter tariffs, as the UEU and

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<v Speaker 2>Canada have done. But there are other things to think

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<v Speaker 2>about here, and let's keep in mind that Trump is

0:13:35.559 --> 0:13:39.480
<v Speaker 2>a highly transactional president. There is a possibility that this

0:13:39.520 --> 0:13:42.760
<v Speaker 2>could spill it over into the broader relationship beyond our

0:13:42.760 --> 0:13:47.040
<v Speaker 2>trade relationship. It's possible that Trump may try and leverage

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<v Speaker 2>security and strategic issues with Australia. The concern that some

0:13:52.120 --> 0:13:54.360
<v Speaker 2>people have expressed is that we might be pushed to

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<v Speaker 2>concede some of our foreign policy independence. For instance, does

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<v Speaker 2>that mean that the US could push for US to

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<v Speaker 2>take a more aggressive stance on China in return for

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<v Speaker 2>lighter treatment on trade? You know, alberniez has talked a

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<v Speaker 2>lot about our friendship with the US, but definitely, as

0:14:11.160 --> 0:14:13.880
<v Speaker 2>we're seeing this play out, this isn't how friends act.

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<v Speaker 1>Emily, thank you so much for coming on.

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<v Speaker 2>Thanks so much for having me, Daniel, it's greats to talk.

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<v Speaker 1>Also in the news, Premiergere sent to Allen is facing

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<v Speaker 1>criticism over who pledgs to make Victoria's bail laws the

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<v Speaker 1>toughest in the country. The state government plans to undo

0:14:42.440 --> 0:14:45.640
<v Speaker 1>the loosening of bail laws recommended by the coroner following

0:14:45.680 --> 0:14:48.040
<v Speaker 1>the death and custody of Gundi Jamara Jaji Rung with

0:14:48.200 --> 0:14:52.200
<v Speaker 1>RAJRII and Jordi yorder woman Veronica Nelson. He died while

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<v Speaker 1>I'm remanned for a crime that would not have led

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<v Speaker 1>to jail time. Nelson's mother only Donna Nelson, said the

0:14:58.400 --> 0:15:02.480
<v Speaker 1>movie is an insult to my daughter Veronica's memory. And

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<v Speaker 1>incidents of Islamophobia have doubled over the past two years,

0:15:06.160 --> 0:15:09.600
<v Speaker 1>according to a new report from the Islamophobia Register. The

0:15:09.680 --> 0:15:12.280
<v Speaker 1>Register found that around half the incidents were recorded in

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<v Speaker 1>New South Wales, which has the biggest Muslim communities in

0:15:15.320 --> 0:15:18.000
<v Speaker 1>the country. It also found that women and girls were

0:15:18.040 --> 0:15:21.360
<v Speaker 1>the victims in three quarters of the attacks. The researchers

0:15:21.360 --> 0:15:24.760
<v Speaker 1>behind the Register said this year represented the biggest rise

0:15:24.760 --> 0:15:29.200
<v Speaker 1>in Islamophobic incidents since it began collecting reports in twenty fourteen.

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<v Speaker 1>I'm Daniel James. This is seven Am. We'll be back

0:15:32.680 --> 0:15:36.080
<v Speaker 1>with a special Saturday edition of seven Am tomorrow. See

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<v Speaker 1>you then.