Speaker 1: Already and this is this is the Daily Oh, this
Speaker 1: is the Daily oas Oh, now it makes sense. Good
Speaker 1: morning and welcome to the Daily OS. It's Friday, the
Speaker 1: fourth of April. I'm Sam Kozlowski.
Speaker 2: I'm Zara Sidler.
Speaker 1: Yesterday, US President Donald Trump officially announced his Liberation Day
Speaker 1: tariffs and reciprocal tariffs on all imports into America. This
Speaker 1: includes a blankert ten percent tax on all Australian goods
Speaker 1: entering America, ending twenty years of tariff free trade between
Speaker 1: our nations under a free trade agreement. Now, all of
Speaker 1: this comes in the first week of Australia's federal election
Speaker 1: campaign period, with both the PM and the Opposition leader
Speaker 1: explaining to Australians how they would approach our changing relationship
Speaker 1: with the US. This is a pretty significant economic shift
Speaker 1: that is going to impact Australia's economy, with some industries
Speaker 1: to be hit harder than others, is based on how
Speaker 1: much they actually export to America. In today's podcast, we're
Speaker 1: going to explain precisely what these tariffs actually are, why
Speaker 1: they're being introduced, and what they mean for Australia's economy,
Speaker 1: but more importantly, our relationship with the US SAM.
Speaker 2: As you've already foreshadowed, this is a huge economics story.
Speaker 2: It's going to fundamentally change economies around the world. And
Speaker 2: before we go into what Donald Trump's announcement actually is
Speaker 2: and what it means, can we just take a step back,
Speaker 2: give me a high level definition. What are tariffs and
Speaker 2: what are they intended to do?
Speaker 1: It's the TDA way, isn't it. To just get off
Speaker 1: the bat. Understand the term we're talking about. So, a
Speaker 1: tariff is a tax on imports. When foreign made goods
Speaker 1: are brought into a country, the importer of those goods
Speaker 1: has to pay at tax, and the tax is collected
Speaker 1: by officers at the border. So literally, picture somebody at
Speaker 1: a shipping dock in the US collecting a payment to
Speaker 1: allow a shipment of goods to come in from earlier. Now,
Speaker 1: tariffs can serve a couple of purposes. They can make
Speaker 1: imported goods more expensive, and that encourages citizens and businesses
Speaker 1: to buy locally produced alternatives instead. They also, of course,
Speaker 1: generate a whole new stream of revenue for the governments
Speaker 1: that collect them.
Speaker 2: Okay, And so there are a bunch of different reasons
Speaker 2: why tariffs might be imposed. There might be dear political reasons,
Speaker 2: there might be economic reasons. What is the justification here
Speaker 2: from Donald Trump as to why he is implementing these tariffs.
Speaker 1: So, Trump has consistently campaigned on bringing manufacturing jobs back
Speaker 1: to America and reducing trade deficits with other countries, and
Speaker 1: the trade deficit essentially means that another country is making
Speaker 1: more from its trade relationship with America than America is
Speaker 1: with them. Now, in his own words during the Liberation
Speaker 1: Day announcement yesterday, Trump said, for decades, our country has
Speaker 1: been looted, pillaged, raped, and plundered by nations near and far,
Speaker 1: both friend and foe alike.
Speaker 2: Wow.
Speaker 1: Now. One phrase that was particularly powerful yesterday was Trump's
Speaker 1: description of the day as America's declaration of economic independence. Ultimately,
Speaker 1: the White House believes that they're going to have significant
Speaker 1: financial gains from this, and they're going to protect domestic
Speaker 1: industries and force other countries to lower their tariffs on
Speaker 1: American goods. Now. It's worth noting that many economists disagree
Speaker 1: with this assessment. They argue that tariffs often lead to
Speaker 1: higher prices for consumers.
Speaker 2: And American consumers.
Speaker 1: There exactly, and also for everyone around the world. It
Speaker 1: could lead to trade wars that harm global economic growth.
Speaker 2: But obviously that's not the way that Donald Trump sees it.
Speaker 2: He's really positioning this as an America first. You know,
Speaker 2: even the language of Liberation Day, the day that he
Speaker 2: announced these tariffs, all of that is very deliberate language.
Speaker 2: Can you talk me through the exact announcement that we
Speaker 2: had from Trump yesterday?
Speaker 1: So we had a couple of weeks ago an announcement
Speaker 1: that there would be an announcement, and so there was
Speaker 1: a type of announcement. There was a foreshadowing of Liberation Day.
Speaker 1: We didn't really have details.
Speaker 2: Day is a really fascinating term.
Speaker 1: It's so interesting to think about the theater of it all.
Speaker 1: Even in the way that the ceremony was staged. It
Speaker 1: was a major event really at the White House. We
Speaker 1: didn't have many details. We knew it would be relating
Speaker 1: to tariffs. Countries all around the world were trying to
Speaker 1: almost preempt what these tariffs would be, arrange meetings with
Speaker 1: the White House to try and negotiate separate agreements in
Speaker 1: case it was globally applied. Sure enough, in this big
Speaker 1: ceremony on the White House lawn, Trump officially signed an
Speaker 1: Executive Order implementing global tariffs. So not one country outside
Speaker 1: the US was given an exemption, and the baseline is
Speaker 1: ten percent tariffs on all imports into the US and
Speaker 1: that is going to affect Australia. And we'll talk through
Speaker 1: how in a minute.
Speaker 2: So just quickly, if you're an Australian business and you're
Speaker 2: exporting let's say, beef from the country into America, that's
Speaker 2: now going to be hit with ten percent.
Speaker 1: Tax exactly, okay, and in many respects, and we can
Speaker 1: talk through this a bit more in a sect. That's
Speaker 1: actually the lighter end of the deal because a lot
Speaker 1: of other countries have been hit by what Donald Trump
Speaker 1: is calling reciprocal tariffs.
Speaker 2: Just explain quickly what you mean by reciprocal tariffs.
Speaker 1: So basically, those are tariffs on top of tariffs only
Speaker 1: for countries that have existing limitations on what American goods
Speaker 1: can be imported into those countries. So I'll give you
Speaker 1: an example, please do so China. Yeah, there's currently a
Speaker 1: sixty seven percent tariff on US goods that enter China.
Speaker 1: So for US exporter is sending stuff to Beijing. So
Speaker 1: Trump has applied a reciprocal tariff of thirty four percent
Speaker 1: on all Chinese goods that come into the US, on
Speaker 1: top of the twenty percent that he's already announced. So
Speaker 1: Chinese goods now will face a fifty four percent tariff.
Speaker 1: That's a huge markup for American importers who want to
Speaker 1: import stuff from China, where a lot of goods and
Speaker 1: services are made. They're not the only ones that EU
Speaker 1: will pay an extra twenty percent on top of the baseline.
Speaker 1: Countries like India and Japan are going to pay twenty
Speaker 1: six and twenty four percent. And Trump said these reciprocal
Speaker 1: tariffs were flexible, but not in the good way. He
Speaker 1: said that should countries that have reciprocal tariffs applied to
Speaker 1: them increase their tariffs on US goods in return to
Speaker 1: match it, he's going to raise US tariffs. And that
Speaker 1: quite simply is the beginning of a trade war.
Speaker 2: Okay, So my understanding reciprocal tariffs is tit for TAD.
Speaker 1: That's my comprehension. That's essentially the way it's going to work.
Speaker 2: Yeah, it's really interesting, But I think it's also interesting
Speaker 2: to remember that certain countries, you know, their whole economies
Speaker 2: are based on their exports. That you know, this will
Speaker 2: have different implications for different countries. I do want to
Speaker 2: just bring this domestically though, because, as you said at
Speaker 2: the top, we are affected. Every single country is affected.
Speaker 2: Does Australia currently have any tariffs on US goods? Like,
Speaker 2: are we in this kind of reciprocal relationship here?
Speaker 1: We don't have any tariffs on US goods. However, we
Speaker 1: do have some restrictions on importing certain products from America.
Speaker 1: And one example that you mentioned already is beef. So
Speaker 1: Australia has a policy that doesn't allow beef imports from
Speaker 1: the US. But that's because of strict Australian biosecurity laws,
Speaker 1: not necessarily.
Speaker 2: Because those ads on the plane when you're landing.
Speaker 1: Exactly think of the ad on the plane. So Australia
Speaker 1: is going to get still that ten percent baseline tariff
Speaker 1: even though we don't reciprocate that the other way, and.
Speaker 2: We don't reciprocate that the other way, or we haven't traditionally,
Speaker 2: because we've had a free trade agreement which has meant
Speaker 2: that we don't have tariffs.
Speaker 1: Exactly, and that's been in place since two thousand and five,
Speaker 1: and that's really important in terms of how we understand
Speaker 1: what this will change in the relationship between Australia and
Speaker 1: the US. I mean, this is a relationship that, sure
Speaker 1: there's that free trade agreement, but there's also a lot
Speaker 1: of shared defense goals and projects orcus the Quad. So
Speaker 1: there's some really interesting days and weeks ahead in terms
Speaker 1: of these two friends in the Australia in the US.
Speaker 1: Now there's a bit of a strain on that relationship.
Speaker 2: Yeah, and we know that Anthony Alberzi unsuccessfully reached out
Speaker 2: to Donald Trump for a meeting before the tariffs were announced,
Speaker 2: as I'm sure many other world leaders did, but Australia
Speaker 2: did actually get a mention in the Liberation Day speech. Yeah,
Speaker 2: it's not since Joe Biden forgot the name of Scott
Speaker 2: Morrison that we were this front and center in a
Speaker 2: kind of global news event. Talk to me about it.
Speaker 1: Well, it was interesting because there wasn't sort of paperwork
Speaker 1: released by the White House before the announcement. There was
Speaker 1: one moment where Trump brought out a big placard that
Speaker 1: had the tariffs being applied to certain countries. I actually
Speaker 1: started zooming in on my screen to figure out how
Speaker 1: Australia would be impacted, and it wasn't on that board,
Speaker 1: but he did mention us by name. He mentioned us
Speaker 1: in relation to beef. Yeah, he said, they, being Australia,
Speaker 1: won't take any of our beef. They don't want it
Speaker 1: because they don't want it to affect their farmers. And
Speaker 1: you know, I don't blame them, because we're doing the
Speaker 1: same thing right now.
Speaker 2: Now.
Speaker 1: There was a bit of confusion about whether this meant
Speaker 1: Trump would impose a reciprocal ban on Australian beef. Remember
Speaker 1: I said we ban American beef. The government has since
Speaker 1: confirmed the Australian meat is going to be subject to
Speaker 1: that ten percent tariff, not a full ban, okay, but
Speaker 1: that is still very concerning for our beef industry. The
Speaker 1: US is one of our major export markets there and
Speaker 1: Australian beef, as you mentioned, has been tariff free in
Speaker 1: the US since two thousand and five. So this is
Speaker 1: a significant change.
Speaker 2: Yeah, And we've spoken about beef now FA a few
Speaker 2: times on this podcast because it is going to be
Speaker 2: one of the hardest hit industries. What are some of
Speaker 2: the other industries that we can expect to feel the
Speaker 2: impact the most from this tariff announcement?
Speaker 1: So beef is the top export to the US. Then
Speaker 1: you've got metals, including gold, where a big exporter of
Speaker 1: metals used for coins from American coins. You've got pharmaceuticals
Speaker 1: and you've got medical equipment, and those sectors are all
Speaker 1: going to be hit by that ten percent tariff. And
Speaker 1: it is worth noting on top of the ten percent
Speaker 1: that steel and aluminium were already hit by a twenty
Speaker 1: five percent tariff earlier this year, so there's going to
Speaker 1: be now a bit of a compounding factor there. I
Speaker 1: think pharmaceuticals and medical equipment is going to be an
Speaker 1: interesting one because they're quite sensitive to price changes, and
Speaker 1: so it's going to be interesting to see if there's
Speaker 1: Australian pharmaceutical companies that are really impacted if American customers
Speaker 1: start not ordering their products.
Speaker 2: Okay, so just to summarize what you've just said, our
Speaker 2: top import to the US is beef. That's going to
Speaker 2: be hit by the ten percent tariff, the same as
Speaker 2: everything else. The other industries are metals, pharmaceuticals, and medical equipment.
Speaker 1: Is that right exactly?
Speaker 2: And then on top of that we know that there
Speaker 2: are already existing tariffs, that twenty five percent tariff on
Speaker 2: aluminium and steal exports. Yeah, that we've spoken about before
Speaker 2: on this part, So it's going to be widespread, Okay,
Speaker 2: I understand, and clearly that will have an impact on
Speaker 2: our local economy. How have Australian leaders respond to the news.
Speaker 1: Well, all of this is coming in the first week
Speaker 1: of the campaign trail and it's been a really interesting
Speaker 1: exercise where journalists in the press gallery, but also I
Speaker 1: think all voting Australians could look at these two leaders
Speaker 1: to see how they would respond to a significant curve ball.
Speaker 1: Why don't we start with what everybody had in common?
Speaker 1: So both Prime minist anth and the Auberneazy and Opposition
Speaker 1: Leader Peter Dutton expressed concern about the tariffs. The PM
Speaker 1: said quite directly he was critical and said this is
Speaker 1: not the act of a friend and pointed out that
Speaker 1: the reciprocal tariff would be zero, not ten percent, given
Speaker 1: Australia's free trade agreement with the US. Then we heard
Speaker 1: from Opposition leader Peter Dudden. He said this is not
Speaker 1: the treatment Australians deserve. He said the Coalition could have
Speaker 1: achieved a different outcome on tariffs had they been in
Speaker 1: government now, and he was particularly critical of the fact
Speaker 1: as you mentioned that the PM has failed to secure
Speaker 1: a phone call with President Trump within the past two weeks.
Speaker 2: Yeah, I mean, probably not what they wanted on their
Speaker 2: bingo cards for this election campaign, but a really interesting
Speaker 2: one to keep an eye on. We've obviously focused here
Speaker 2: a lot on trade because that's the kind of clear
Speaker 2: area that will be most affected, but we do have
Speaker 2: partnerships outside of trade. Of course, we have defense partnerships
Speaker 2: We've mentioned Orcus for one. What impacts will this have
Speaker 2: on those sorts of relationships.
Speaker 1: Well, it's going to be hard to tell until we
Speaker 1: get a real response from the government on if they
Speaker 1: would like to use the fact that America has defense
Speaker 1: bases in Australia or use the fact that you know,
Speaker 1: we are a close ally for them in terms of
Speaker 1: America keeping an eye on China as leverage to trying
Speaker 1: to get those tariffs reduced. And you have to remember
Speaker 1: that this is a broad relationship, and in fact, America's
Speaker 1: got multifacted relationships with most countries around the world, And
Speaker 1: you're right, trade is just one aspect of this, and
Speaker 1: I wouldn't be surprised to see countries retaliating in ways
Speaker 1: that are not about trade. Could be about shared defense resources,
Speaker 1: it could be about technology and intelligence. But the most
Speaker 1: important thing I think to take out of this is
Speaker 1: the signal from the US government that even close security
Speaker 1: partners aren't exempt from these sorts of penalties.
Speaker 2: Sam, I do just want to end by asking, and
Speaker 2: you might not know the answer to this, but what
Speaker 2: sort of options does Australia have in its back pocket,
Speaker 2: no matter who the leader, no matter who the government
Speaker 2: of the day is, what sort of options do we
Speaker 2: have when responding to tariff announcements like this?
Speaker 1: Well, I guess, to use your phrasing earlier, Zara, in
Speaker 1: the tit for tat kind of battle here, we could
Speaker 1: hit them back with what they've hit us with and
Speaker 1: do our own retaliatory tariffs. The Prime Minister was asked
Speaker 1: about that yesterday. He said that he would not do
Speaker 1: that and that it would create what he called a
Speaker 1: race to the bottom. He pointed out that Australia's trade
Speaker 1: with the US only accounts for about five percent of
Speaker 1: our exports overall, and that the strength of Australia's economy
Speaker 1: is in the fact that we have diverse trading relationships. Now,
Speaker 1: what that ignores is the fact that it could be
Speaker 1: the weakening of other economies that we're much more reliant on,
Speaker 1: think China, India, Vietnam. If they become weaker because of
Speaker 1: a damaged relationship with us, we're going to feel that indirectly.
Speaker 1: The biggest option available for the government is to try
Speaker 1: and solve this diplomatically, and they're going to try and
Speaker 1: negotiate exemptions based on the things that we've talked about,
Speaker 1: the strong relationships economically, but also in terms of defense.
Speaker 1: The Trade Minister Don Farrell he already indicated he'll be
Speaker 1: reaching out to his American counterparts, and Australia's ambassador to
Speaker 1: the US, former Prime Minister Kevin Rudd, is definitely going
Speaker 1: to be working the phone to try and figure out
Speaker 1: how to get a negotiation meeting at the White House.
Speaker 2: In the diary, so interesting, Sam, Thank you for taking
Speaker 2: us through that, so explaining everything we need to know,
Speaker 2: and thank you for joining us on this episode of
Speaker 2: The Daily OS that wraps up another week of Deep Dives.
Speaker 2: We love giving you the news. We hope you love
Speaker 2: this listening to it. We'll be back later today with
Speaker 2: the headlines, but until then, have a great Friday.
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