Speaker 1: From Schwartz Media. I'm Daniel James. This is seven am.
Speaker 1: Donald Trump's trade war is escalating as his wide ranging
Speaker 1: tariffs take effect. Australia had hopes to avoid a twenty
Speaker 1: five percent tariff on our steel and aluminum, but we
Speaker 1: now know there will be no exemptions. While Canada and
Speaker 1: the EU are retaliating. Anthony Albanesi's focus is on trying
Speaker 1: to stem the damage by arguing that other large industries
Speaker 1: that would impact the Australian economy much more should be immune.
Speaker 1: But as Trump gets more aggressive, his decisions on trade
Speaker 1: could spill into every aspect of our alliance. Today, Managing
Speaker 1: editor of the Saturday Paper, Emily Barrett on what the
Speaker 1: tariffs mean for the Australian economy and what the government
Speaker 1: can do about it. It's Friday, March fourteen. Emily. Trump's
Speaker 1: tariffs on Australian steel and aluminum have just come into effect.
Speaker 1: We've heard a lot recently about the government's efforts to
Speaker 1: avoid them. So what if you made of Anthony Alberaneese's
Speaker 1: response to the news.
Speaker 2: Up until this moment, we know that Albenizi has been
Speaker 2: trying to avoid providing what he callses running commentary on
Speaker 2: the Trump administration's decisions. But this moment marks a big
Speaker 2: change because it has an impact and a very direct
Speaker 2: impact on Australia's interests.
Speaker 3: The United States decision to impose tariffs on Australian steel
Speaker 3: and our uminium as part of a global decision are
Speaker 3: concerning it has.
Speaker 2: Been and he's described as we've all heard, the decision
Speaker 2: is entirely unjustified.
Speaker 3: This is against the spirit about two nations enduring friendship
Speaker 3: and fundamentally at odds with the benefits that our economic
Speaker 3: partnership has delivered over more than seventy years.
Speaker 2: Albanzi hasn't seen up until till now, obviously any benefit
Speaker 2: in criticizing Trump, and that's partly because nobody wants to
Speaker 2: poke this particular bear. You know, the US is the
Speaker 2: world's largest economy. We have a very strong and close relationship.
Speaker 2: But as more countries are taking what at least looks
Speaker 2: like principled stances against Trump, voters have been responding pretty positively.
Speaker 2: We've certainly seen this in Canada, right with Mark Karney.
Speaker 2: It's easy to think that there might be a tipping
Speaker 2: point where the consensus, whether it's supported within the US
Speaker 2: or not a sort of a global consensus will become
Speaker 2: more openly critical of the US as a superpower because
Speaker 2: its policies now are sort of they're proving destructive economically
Speaker 2: and as we're seeing geopolitically.
Speaker 1: Well, let's talk about these tariffs twenty five percent on
Speaker 1: steel and aluminium. How much of an impact will I have?
Speaker 2: Yeah, this is easy to overstate. It's something that Albineze
Speaker 2: has pointed out that this is actually not a large
Speaker 2: amount of our exports.
Speaker 3: Australian still and aluminium exports to the United States represent
Speaker 3: less than zero point two two percent of the total
Speaker 3: value of our exports. Neither is in the top ten
Speaker 3: of what Australia sells to the United States.
Speaker 2: Our markets in South Korea and Japan and other parts
Speaker 2: of Asia are much much larger, so we could sell
Speaker 2: more to those sorts of markets, to those consumers. So,
Speaker 2: just as a sort of thought exercise here we contrast
Speaker 2: this with what happened with Chinese tariffs in twenty twenty,
Speaker 2: after Scott Morrison started saying that we should investigate the
Speaker 2: outbreak of COVID nineteen. China is by far our biggest
Speaker 2: trading partner. Those tariffs applied to coal, agricultural products, cotton, lamb, lobs, timber,
Speaker 2: and wine. So the amounts were massive. That ranged from
Speaker 2: forty percent on cotton to more than two hundred percent
Speaker 2: on wine, and those tarrafts were in place for three
Speaker 2: to four years. That's a big impact. That's extensive damage. So,
Speaker 2: you know, this is particularly interesting given that we've seen
Speaker 2: Peter Dutton going very hard on this as a political issue,
Speaker 2: despite the fact that you know, we've just come through
Speaker 2: this far more damaging trade war with China.
Speaker 1: So these tariffs on steel and aluminium might not be
Speaker 1: as significant as some we've seen before, but we know
Speaker 1: the government had been trying to get out of them nonetheless,
Speaker 1: so why didn't we get an exemption as hoped?
Speaker 2: Yeah, So Trump had said, as we know that he
Speaker 2: was he would consider excluding Australia from the twenty five
Speaker 2: percent tariffs after that conversation that he had with Albanezi,
Speaker 2: but his spokesperson Caroline Levitt, said that he considered it
Speaker 2: and he considered against it, so there'll be no exemptions.
Speaker 2: Caroline Levitt says the decision has been made to put
Speaker 2: America's steel first, and Australia is welcome to move its
Speaker 2: still manufacturers to the United States blue scope. We have
Speaker 2: to keep in mind who's advising Trump here. His senior
Speaker 2: counselor on trade and manufacturing as Pitter Navarro. He's an
Speaker 2: extremist in terms of his economic view of the benefits
Speaker 2: of tariffs. He's a real outlier, and he's an aggressive
Speaker 2: hawk on China. He was actually sanctioned by China after
Speaker 2: the first Trump administration and he believes that exemptions from
Speaker 2: tariffs under that administration were what made the strategy fail.
Speaker 2: And it clearly did fail when you consider the trade
Speaker 2: deficit certainly wasn't corrected and the budget wasn't repaired.
Speaker 4: The Biden administration was over three hundred thousand product exclusions
Speaker 4: and virtually every country got it some kind of exemption
Speaker 4: from that, and it took us back down.
Speaker 2: Yeah, so we know that our government nevertheless doesn't want
Speaker 2: this on its watch, and it has been working on
Speaker 2: this constantly. There have been efforts by Trade Minister Don Farrell,
Speaker 2: Foreign Minister Penny Wong, Treasurer Jim Chalmers. They've all been
Speaker 2: on recent trips to the US and Albinizi obviously had
Speaker 2: his call with Trump, and we've heard a lot about
Speaker 2: the fact that Australia has a trade deficit with the US.
Speaker 2: But the lack of a trade deficit isn't the reason
Speaker 2: that we weren't exempted. It has more to do with
Speaker 2: the fact that America really had decided that it was
Speaker 2: going to you this blanket policy in order to see
Speaker 2: it succeed. And while our industry for steel and animinium
Speaker 2: will be able to weather this, the bigger effect for
Speaker 2: Australia is the fact that Trump's really aggressive use of
Speaker 2: tariffs across the board, if it keeps up, will hurt
Speaker 2: the US economy and it will hurt the global economy.
Speaker 1: Coming up after the break, is America headed for a recession?
Speaker 1: And what will that mean for US?
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Speaker 1: Emily, Donald Trump has been announcing and reversing tariff's slefs,
Speaker 1: RAT and Center. How is he using them as a
Speaker 1: tool and what's he trying to achieve.
Speaker 2: Yeah, we actually need a tracker on this because Trump's
Speaker 2: application of this policy is really erratic, and by the
Speaker 2: time this airs, you know, things could have changed again
Speaker 2: because he seems to have created this pattern of stepping
Speaker 2: up tariff stepping off them. It's creating radical uncertainty, and
Speaker 2: one thing that we know that markets don't like is
Speaker 2: uncertainty because that makes it difficult to plan investments in
Speaker 2: large projects, the kinds of things that actually create growth.
Speaker 6: The stock market in freefall again today, opening more than
Speaker 6: fifty points down and sliding even further after the President
Speaker 6: announced increased tariffs on Canada. The market's plunging Monday.
Speaker 2: That is one point in which this is being counterproductive
Speaker 2: so far. What we're seeing from Trump is that he's
Speaker 2: primarily targeted the US's closest allies with tariffs. So Canada
Speaker 2: has twenty five percent on most imports, although it's a
Speaker 2: lower rate on energy. Mexico has twenty five percent also
Speaker 2: on all imports. It's all aluminium and steel. As we
Speaker 2: know now, is it twenty five percent, and there are
Speaker 2: further levies that are supposed to take effect at the
Speaker 2: beginning of April on agricultural products and foreign cars. So
Speaker 2: and in February, if we look at what he's done
Speaker 2: with China, he imposed ten percent tariff and that's been
Speaker 2: up to another ten percent this month. So ultimately, what
Speaker 2: Trump loves about tariffs is that it's a weapon that
Speaker 2: he can wield without having to go to Congress, purely
Speaker 2: by executive order. So it's essentially his power. So Trump
Speaker 2: has framed the tariffs as a way to sort of
Speaker 2: protect American industry and create jobs and bring back manufacturing
Speaker 2: industries in the US. That's where he sees as kind
Speaker 2: of the seat of American strength.
Speaker 1: So the idea of bringing back manufacturing jobs to the
Speaker 1: US is a worthwhile goal on the surface, and one
Speaker 1: that millions of Americans we're voting for when they voted
Speaker 1: for Trump. So what are the chances of that actually working.
Speaker 2: Manufacturing entirely in America across many industries is simply more costs,
Speaker 2: wages are higher in the US now, a lot of
Speaker 2: these industries are less competitive globally than they actually need
Speaker 2: to be if they want to supply their own needs,
Speaker 2: and they rely heavily on cheaper inputs from elsewhere in
Speaker 2: the world. Manufacturing is really capital intensive. It takes more
Speaker 2: than tariffs also to fix it. If you look at
Speaker 2: the trajectory of manufacturing in the US, over decades, jobs
Speaker 2: for manufacturing as a sheriff total employment went from about
Speaker 2: thirty percent in the seventies to just over eight percent. Now,
Speaker 2: the bigger question really is whether this is actually the
Speaker 2: future that American needs. There are ways in which Biden
Speaker 2: was trying to sort of configure a manufacturing future for
Speaker 2: America that was based around the Green Transition, so that's
Speaker 2: where you could get more high skilled and low schooled
Speaker 2: jobs pulling into this kind of grand project. He saw
Speaker 2: subsidies and sort of government support as being useful for this.
Speaker 2: These were legislated under the Inflation Reduction Act, and that's
Speaker 2: a national project that was already underway and it was
Speaker 2: full of jobs. Now what Trump wants to do is
Speaker 2: trash that Inflation Reduction Act. He wants to wield big tariffs.
Speaker 2: He's taking America essentially back to a failed project of
Speaker 2: sort of the nineteen thirties, and that actually deepened the
Speaker 2: Great Depression. It wasn't a successful strategy the first time round.
Speaker 2: But interestingly, the way he sold tariffs to people. You
Speaker 2: know that not a lot of people are very persuaded
Speaker 2: by the effectiveness of tariffs, and for good reason. But
Speaker 2: the way he's sold it is by saying that they'll
Speaker 2: make the US a lot of money. He seems to
Speaker 2: think that this is going to correct the country's trade
Speaker 2: deficit and help with its budget, and neither of these
Speaker 2: things are true. Levies on tariffs are not paid by exporters.
Speaker 2: They're paid by importers who tend to pass them on
Speaker 2: to consumers wherever they can, so they raise prices in
Speaker 2: the country that imposes them, and that in turn is inflationary,
Speaker 2: and coupled with a slowing economy, we could see stagflesh,
Speaker 2: which is when inflation is rising but growth is slowing.
Speaker 2: We now have Trump actually refusing to rule out a
Speaker 2: recession for the US. He went on Fox News, which
Speaker 2: was interesting earlier this week, saying that the economy will
Speaker 2: get worse before it gets better.
Speaker 7: Are you expecting a reception this year? I hate to
Speaker 7: predict things like that. There is a period of transition
Speaker 7: because what we're doing is very big We're bringing wealth
Speaker 7: back to America. That's a big thing, and there are
Speaker 7: always periods of it takes a little time. It takes
Speaker 7: a little time, but I think it should be great
Speaker 7: for US. I mean, I think it should be great.
Speaker 1: So how significant is that to hear Trump preparing Americans
Speaker 1: for a potential recession.
Speaker 2: It's very significant. This is not going to be a
Speaker 2: popular thing, and Trump loves to protect his popularity, but
Speaker 2: he's clearly got to say something about the fact that
Speaker 2: all of Wall Street is downgrading their growth forecasts. Markets
Speaker 2: are sliding, and we've seen the worst declines in markets
Speaker 2: actually since the height of the inflation surgeon in twenty
Speaker 2: twenty two.
Speaker 1: And if America does go into recession, affect Australia.
Speaker 2: So when the world's largest economy suffers, so does everyone else.
Speaker 2: To an extent, our markets do tend to follow the US,
Speaker 2: so we have seen declines here. And of course then
Speaker 2: there's the risk of more tariffs if the US chose
Speaker 2: to target our pharmaceutical products. Those are bigger for US
Speaker 2: than aluminium and steel. Certainly, it's important though, to remember
Speaker 2: that Australia's fortunes are pretty dependent on our nearest neighbors
Speaker 2: in Asia and on the strength of our own economy,
Speaker 2: so we've weathered American storms before. In the in the
Speaker 2: global financial crisis, we didn't have a recession that was
Speaker 2: really we were a rare country to escape, but that's
Speaker 2: because the government offered enough stimulus to support people and
Speaker 2: the central Bank was able to cut interest rates when
Speaker 2: it needed to.
Speaker 1: So emily. With all of that in mind, what can
Speaker 1: the government do to protect their economy from the worst
Speaker 1: of it?
Speaker 2: Right, So, when it comes to dealing with tariffs, Australia
Speaker 2: has historically favored this diplomatic negotiation over retaliatory trade measures.
Speaker 2: We know they don't work if you look at the
Speaker 2: way that we dealt with the Chinese government when it
Speaker 2: applied those tariffs up to two hundred and eighteen percent
Speaker 2: on Australian wine. The government sought a diplomatic solution rather
Speaker 2: than a broader trade war, and that ultimately did work
Speaker 2: out for us after some pain. We know that negotiations
Speaker 2: also are still ongoing. So Penny Wong has said that
Speaker 2: we could use our critical minerals, of which we have
Speaker 2: vast supplies, as a sort of a bargaining chip. So
Speaker 2: we're not without some leverage. We're very unlikely to see
Speaker 2: our government retaliate with counter tariffs, as the UEU and
Speaker 2: Canada have done. But there are other things to think
Speaker 2: about here, and let's keep in mind that Trump is
Speaker 2: a highly transactional president. There is a possibility that this
Speaker 2: could spill it over into the broader relationship beyond our
Speaker 2: trade relationship. It's possible that Trump may try and leverage
Speaker 2: security and strategic issues with Australia. The concern that some
Speaker 2: people have expressed is that we might be pushed to
Speaker 2: concede some of our foreign policy independence. For instance, does
Speaker 2: that mean that the US could push for US to
Speaker 2: take a more aggressive stance on China in return for
Speaker 2: lighter treatment on trade? You know, alberniez has talked a
Speaker 2: lot about our friendship with the US, but definitely, as
Speaker 2: we're seeing this play out, this isn't how friends act.
Speaker 1: Emily, thank you so much for coming on.
Speaker 2: Thanks so much for having me, Daniel, it's greats to talk.
Speaker 1: Also in the news, Premiergere sent to Allen is facing
Speaker 1: criticism over who pledgs to make Victoria's bail laws the
Speaker 1: toughest in the country. The state government plans to undo
Speaker 1: the loosening of bail laws recommended by the coroner following
Speaker 1: the death and custody of Gundi Jamara Jaji Rung with
Speaker 1: RAJRII and Jordi yorder woman Veronica Nelson. He died while
Speaker 1: I'm remanned for a crime that would not have led
Speaker 1: to jail time. Nelson's mother only Donna Nelson, said the
Speaker 1: movie is an insult to my daughter Veronica's memory. And
Speaker 1: incidents of Islamophobia have doubled over the past two years,
Speaker 1: according to a new report from the Islamophobia Register. The
Speaker 1: Register found that around half the incidents were recorded in
Speaker 1: New South Wales, which has the biggest Muslim communities in
Speaker 1: the country. It also found that women and girls were
Speaker 1: the victims in three quarters of the attacks. The researchers
Speaker 1: behind the Register said this year represented the biggest rise
Speaker 1: in Islamophobic incidents since it began collecting reports in twenty fourteen.
Speaker 1: I'm Daniel James. This is seven Am. We'll be back
Speaker 1: with a special Saturday edition of seven Am tomorrow. See
Speaker 1: you then.