WEBVTT - The new tariffs hitting Australia, explained

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<v Speaker 1>Already and this is this is the Daily Oh, this

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<v Speaker 1>is the Daily oas Oh, now it makes sense. Good

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<v Speaker 1>morning and welcome to the Daily OS. It's Friday, the

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<v Speaker 1>fourth of April. I'm Sam Kozlowski.

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<v Speaker 2>I'm Zara Sidler.

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<v Speaker 1>Yesterday, US President Donald Trump officially announced his Liberation Day

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<v Speaker 1>tariffs and reciprocal tariffs on all imports into America. This

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<v Speaker 1>includes a blankert ten percent tax on all Australian goods

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<v Speaker 1>entering America, ending twenty years of tariff free trade between

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<v Speaker 1>our nations under a free trade agreement. Now, all of

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<v Speaker 1>this comes in the first week of Australia's federal election

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<v Speaker 1>campaign period, with both the PM and the Opposition leader

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<v Speaker 1>explaining to Australians how they would approach our changing relationship

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<v Speaker 1>with the US. This is a pretty significant economic shift

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<v Speaker 1>that is going to impact Australia's economy, with some industries

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<v Speaker 1>to be hit harder than others, is based on how

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<v Speaker 1>much they actually export to America. In today's podcast, we're

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<v Speaker 1>going to explain precisely what these tariffs actually are, why

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<v Speaker 1>they're being introduced, and what they mean for Australia's economy,

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<v Speaker 1>but more importantly, our relationship with the US SAM.

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<v Speaker 2>As you've already foreshadowed, this is a huge economics story.

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<v Speaker 2>It's going to fundamentally change economies around the world. And

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<v Speaker 2>before we go into what Donald Trump's announcement actually is

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<v Speaker 2>and what it means, can we just take a step back,

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<v Speaker 2>give me a high level definition. What are tariffs and

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<v Speaker 2>what are they intended to do?

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<v Speaker 1>It's the TDA way, isn't it. To just get off

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<v Speaker 1>the bat. Understand the term we're talking about. So, a

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<v Speaker 1>tariff is a tax on imports. When foreign made goods

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<v Speaker 1>are brought into a country, the importer of those goods

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<v Speaker 1>has to pay at tax, and the tax is collected

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<v Speaker 1>by officers at the border. So literally, picture somebody at

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<v Speaker 1>a shipping dock in the US collecting a payment to

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<v Speaker 1>allow a shipment of goods to come in from earlier. Now,

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<v Speaker 1>tariffs can serve a couple of purposes. They can make

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<v Speaker 1>imported goods more expensive, and that encourages citizens and businesses

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<v Speaker 1>to buy locally produced alternatives instead. They also, of course,

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<v Speaker 1>generate a whole new stream of revenue for the governments

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<v Speaker 1>that collect them.

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<v Speaker 2>Okay, And so there are a bunch of different reasons

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<v Speaker 2>why tariffs might be imposed. There might be dear political reasons,

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<v Speaker 2>there might be economic reasons. What is the justification here

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<v Speaker 2>from Donald Trump as to why he is implementing these tariffs.

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<v Speaker 1>So, Trump has consistently campaigned on bringing manufacturing jobs back

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<v Speaker 1>to America and reducing trade deficits with other countries, and

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<v Speaker 1>the trade deficit essentially means that another country is making

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<v Speaker 1>more from its trade relationship with America than America is

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<v Speaker 1>with them. Now, in his own words during the Liberation

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<v Speaker 1>Day announcement yesterday, Trump said, for decades, our country has

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<v Speaker 1>been looted, pillaged, raped, and plundered by nations near and far,

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<v Speaker 1>both friend and foe alike.

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<v Speaker 2>Wow.

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<v Speaker 1>Now. One phrase that was particularly powerful yesterday was Trump's

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<v Speaker 1>description of the day as America's declaration of economic independence. Ultimately,

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<v Speaker 1>the White House believes that they're going to have significant

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<v Speaker 1>financial gains from this, and they're going to protect domestic

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<v Speaker 1>industries and force other countries to lower their tariffs on

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<v Speaker 1>American goods. Now. It's worth noting that many economists disagree

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<v Speaker 1>with this assessment. They argue that tariffs often lead to

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<v Speaker 1>higher prices for consumers.

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<v Speaker 2>And American consumers.

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<v Speaker 1>There exactly, and also for everyone around the world. It

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<v Speaker 1>could lead to trade wars that harm global economic growth.

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<v Speaker 2>But obviously that's not the way that Donald Trump sees it.

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<v Speaker 2>He's really positioning this as an America first. You know,

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<v Speaker 2>even the language of Liberation Day, the day that he

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<v Speaker 2>announced these tariffs, all of that is very deliberate language.

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<v Speaker 2>Can you talk me through the exact announcement that we

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<v Speaker 2>had from Trump yesterday?

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<v Speaker 1>So we had a couple of weeks ago an announcement

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<v Speaker 1>that there would be an announcement, and so there was

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<v Speaker 1>a type of announcement. There was a foreshadowing of Liberation Day.

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<v Speaker 1>We didn't really have details.

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<v Speaker 2>Day is a really fascinating term.

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<v Speaker 1>It's so interesting to think about the theater of it all.

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<v Speaker 1>Even in the way that the ceremony was staged. It

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<v Speaker 1>was a major event really at the White House. We

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<v Speaker 1>didn't have many details. We knew it would be relating

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<v Speaker 1>to tariffs. Countries all around the world were trying to

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<v Speaker 1>almost preempt what these tariffs would be, arrange meetings with

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<v Speaker 1>the White House to try and negotiate separate agreements in

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<v Speaker 1>case it was globally applied. Sure enough, in this big

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<v Speaker 1>ceremony on the White House lawn, Trump officially signed an

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<v Speaker 1>Executive Order implementing global tariffs. So not one country outside

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<v Speaker 1>the US was given an exemption, and the baseline is

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<v Speaker 1>ten percent tariffs on all imports into the US and

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<v Speaker 1>that is going to affect Australia. And we'll talk through

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<v Speaker 1>how in a minute.

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<v Speaker 2>So just quickly, if you're an Australian business and you're

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<v Speaker 2>exporting let's say, beef from the country into America, that's

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<v Speaker 2>now going to be hit with ten percent.

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<v Speaker 1>Tax exactly, okay, and in many respects, and we can

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<v Speaker 1>talk through this a bit more in a sect. That's

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<v Speaker 1>actually the lighter end of the deal because a lot

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<v Speaker 1>of other countries have been hit by what Donald Trump

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<v Speaker 1>is calling reciprocal tariffs.

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<v Speaker 2>Just explain quickly what you mean by reciprocal tariffs.

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<v Speaker 1>So basically, those are tariffs on top of tariffs only

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<v Speaker 1>for countries that have existing limitations on what American goods

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<v Speaker 1>can be imported into those countries. So I'll give you

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<v Speaker 1>an example, please do so China. Yeah, there's currently a

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<v Speaker 1>sixty seven percent tariff on US goods that enter China.

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<v Speaker 1>So for US exporter is sending stuff to Beijing. So

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<v Speaker 1>Trump has applied a reciprocal tariff of thirty four percent

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<v Speaker 1>on all Chinese goods that come into the US, on

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<v Speaker 1>top of the twenty percent that he's already announced. So

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<v Speaker 1>Chinese goods now will face a fifty four percent tariff.

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<v Speaker 1>That's a huge markup for American importers who want to

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<v Speaker 1>import stuff from China, where a lot of goods and

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<v Speaker 1>services are made. They're not the only ones that EU

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<v Speaker 1>will pay an extra twenty percent on top of the baseline.

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<v Speaker 1>Countries like India and Japan are going to pay twenty

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<v Speaker 1>six and twenty four percent. And Trump said these reciprocal

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<v Speaker 1>tariffs were flexible, but not in the good way. He

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<v Speaker 1>said that should countries that have reciprocal tariffs applied to

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<v Speaker 1>them increase their tariffs on US goods in return to

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<v Speaker 1>match it, he's going to raise US tariffs. And that

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<v Speaker 1>quite simply is the beginning of a trade war.

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<v Speaker 2>Okay, So my understanding reciprocal tariffs is tit for TAD.

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<v Speaker 1>That's my comprehension. That's essentially the way it's going to work.

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<v Speaker 2>Yeah, it's really interesting, But I think it's also interesting

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<v Speaker 2>to remember that certain countries, you know, their whole economies

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<v Speaker 2>are based on their exports. That you know, this will

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<v Speaker 2>have different implications for different countries. I do want to

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<v Speaker 2>just bring this domestically though, because, as you said at

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<v Speaker 2>the top, we are affected. Every single country is affected.

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<v Speaker 2>Does Australia currently have any tariffs on US goods? Like,

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<v Speaker 2>are we in this kind of reciprocal relationship here?

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<v Speaker 1>We don't have any tariffs on US goods. However, we

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<v Speaker 1>do have some restrictions on importing certain products from America.

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<v Speaker 1>And one example that you mentioned already is beef. So

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<v Speaker 1>Australia has a policy that doesn't allow beef imports from

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<v Speaker 1>the US. But that's because of strict Australian biosecurity laws,

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<v Speaker 1>not necessarily.

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<v Speaker 2>Because those ads on the plane when you're landing.

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<v Speaker 1>Exactly think of the ad on the plane. So Australia

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<v Speaker 1>is going to get still that ten percent baseline tariff

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<v Speaker 1>even though we don't reciprocate that the other way, and.

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<v Speaker 2>We don't reciprocate that the other way, or we haven't traditionally,

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<v Speaker 2>because we've had a free trade agreement which has meant

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<v Speaker 2>that we don't have tariffs.

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<v Speaker 1>Exactly, and that's been in place since two thousand and five,

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<v Speaker 1>and that's really important in terms of how we understand

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<v Speaker 1>what this will change in the relationship between Australia and

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<v Speaker 1>the US. I mean, this is a relationship that, sure

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<v Speaker 1>there's that free trade agreement, but there's also a lot

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<v Speaker 1>of shared defense goals and projects orcus the Quad. So

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<v Speaker 1>there's some really interesting days and weeks ahead in terms

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<v Speaker 1>of these two friends in the Australia in the US.

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<v Speaker 1>Now there's a bit of a strain on that relationship.

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<v Speaker 2>Yeah, and we know that Anthony Alberzi unsuccessfully reached out

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<v Speaker 2>to Donald Trump for a meeting before the tariffs were announced,

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<v Speaker 2>as I'm sure many other world leaders did, but Australia

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<v Speaker 2>did actually get a mention in the Liberation Day speech. Yeah,

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<v Speaker 2>it's not since Joe Biden forgot the name of Scott

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<v Speaker 2>Morrison that we were this front and center in a

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<v Speaker 2>kind of global news event. Talk to me about it.

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<v Speaker 1>Well, it was interesting because there wasn't sort of paperwork

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<v Speaker 1>released by the White House before the announcement. There was

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<v Speaker 1>one moment where Trump brought out a big placard that

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<v Speaker 1>had the tariffs being applied to certain countries. I actually

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<v Speaker 1>started zooming in on my screen to figure out how

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<v Speaker 1>Australia would be impacted, and it wasn't on that board,

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<v Speaker 1>but he did mention us by name. He mentioned us

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<v Speaker 1>in relation to beef. Yeah, he said, they, being Australia,

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<v Speaker 1>won't take any of our beef. They don't want it

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<v Speaker 1>because they don't want it to affect their farmers. And

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<v Speaker 1>you know, I don't blame them, because we're doing the

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<v Speaker 1>same thing right now.

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<v Speaker 2>Now.

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<v Speaker 1>There was a bit of confusion about whether this meant

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<v Speaker 1>Trump would impose a reciprocal ban on Australian beef. Remember

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<v Speaker 1>I said we ban American beef. The government has since

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<v Speaker 1>confirmed the Australian meat is going to be subject to

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<v Speaker 1>that ten percent tariff, not a full ban, okay, but

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<v Speaker 1>that is still very concerning for our beef industry. The

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<v Speaker 1>US is one of our major export markets there and

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<v Speaker 1>Australian beef, as you mentioned, has been tariff free in

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<v Speaker 1>the US since two thousand and five. So this is

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<v Speaker 1>a significant change.

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<v Speaker 2>Yeah, And we've spoken about beef now FA a few

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<v Speaker 2>times on this podcast because it is going to be

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<v Speaker 2>one of the hardest hit industries. What are some of

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<v Speaker 2>the other industries that we can expect to feel the

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<v Speaker 2>impact the most from this tariff announcement?

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<v Speaker 1>So beef is the top export to the US. Then

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<v Speaker 1>you've got metals, including gold, where a big exporter of

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<v Speaker 1>metals used for coins from American coins. You've got pharmaceuticals

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<v Speaker 1>and you've got medical equipment, and those sectors are all

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<v Speaker 1>going to be hit by that ten percent tariff. And

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<v Speaker 1>it is worth noting on top of the ten percent

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<v Speaker 1>that steel and aluminium were already hit by a twenty

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<v Speaker 1>five percent tariff earlier this year, so there's going to

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<v Speaker 1>be now a bit of a compounding factor there. I

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<v Speaker 1>think pharmaceuticals and medical equipment is going to be an

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<v Speaker 1>interesting one because they're quite sensitive to price changes, and

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<v Speaker 1>so it's going to be interesting to see if there's

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<v Speaker 1>Australian pharmaceutical companies that are really impacted if American customers

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<v Speaker 1>start not ordering their products.

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<v Speaker 2>Okay, so just to summarize what you've just said, our

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<v Speaker 2>top import to the US is beef. That's going to

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<v Speaker 2>be hit by the ten percent tariff, the same as

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<v Speaker 2>everything else. The other industries are metals, pharmaceuticals, and medical equipment.

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<v Speaker 1>Is that right exactly?

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<v Speaker 2>And then on top of that we know that there

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<v Speaker 2>are already existing tariffs, that twenty five percent tariff on

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<v Speaker 2>aluminium and steal exports. Yeah, that we've spoken about before

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<v Speaker 2>on this part, So it's going to be widespread, Okay,

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<v Speaker 2>I understand, and clearly that will have an impact on

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<v Speaker 2>our local economy. How have Australian leaders respond to the news.

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<v Speaker 1>Well, all of this is coming in the first week

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<v Speaker 1>of the campaign trail and it's been a really interesting

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<v Speaker 1>exercise where journalists in the press gallery, but also I

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<v Speaker 1>think all voting Australians could look at these two leaders

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<v Speaker 1>to see how they would respond to a significant curve ball.

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<v Speaker 1>Why don't we start with what everybody had in common?

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<v Speaker 1>So both Prime minist anth and the Auberneazy and Opposition

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<v Speaker 1>Leader Peter Dutton expressed concern about the tariffs. The PM

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<v Speaker 1>said quite directly he was critical and said this is

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<v Speaker 1>not the act of a friend and pointed out that

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<v Speaker 1>the reciprocal tariff would be zero, not ten percent, given

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<v Speaker 1>Australia's free trade agreement with the US. Then we heard

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<v Speaker 1>from Opposition leader Peter Dudden. He said this is not

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<v Speaker 1>the treatment Australians deserve. He said the Coalition could have

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<v Speaker 1>achieved a different outcome on tariffs had they been in

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<v Speaker 1>government now, and he was particularly critical of the fact

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<v Speaker 1>as you mentioned that the PM has failed to secure

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<v Speaker 1>a phone call with President Trump within the past two weeks.

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<v Speaker 2>Yeah, I mean, probably not what they wanted on their

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<v Speaker 2>bingo cards for this election campaign, but a really interesting

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<v Speaker 2>one to keep an eye on. We've obviously focused here

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<v Speaker 2>a lot on trade because that's the kind of clear

0:12:12.559 --> 0:12:15.640
<v Speaker 2>area that will be most affected, but we do have

0:12:16.080 --> 0:12:19.040
<v Speaker 2>partnerships outside of trade. Of course, we have defense partnerships

0:12:19.080 --> 0:12:22.120
<v Speaker 2>We've mentioned Orcus for one. What impacts will this have

0:12:22.400 --> 0:12:24.760
<v Speaker 2>on those sorts of relationships.

0:12:24.120 --> 0:12:26.400
<v Speaker 1>Well, it's going to be hard to tell until we

0:12:26.440 --> 0:12:30.160
<v Speaker 1>get a real response from the government on if they

0:12:30.200 --> 0:12:33.600
<v Speaker 1>would like to use the fact that America has defense

0:12:33.679 --> 0:12:36.880
<v Speaker 1>bases in Australia or use the fact that you know,

0:12:36.920 --> 0:12:39.400
<v Speaker 1>we are a close ally for them in terms of

0:12:39.440 --> 0:12:42.760
<v Speaker 1>America keeping an eye on China as leverage to trying

0:12:42.760 --> 0:12:45.679
<v Speaker 1>to get those tariffs reduced. And you have to remember

0:12:45.760 --> 0:12:48.840
<v Speaker 1>that this is a broad relationship, and in fact, America's

0:12:49.160 --> 0:12:52.920
<v Speaker 1>got multifacted relationships with most countries around the world, And

0:12:53.240 --> 0:12:55.280
<v Speaker 1>you're right, trade is just one aspect of this, and

0:12:55.320 --> 0:12:58.240
<v Speaker 1>I wouldn't be surprised to see countries retaliating in ways

0:12:58.280 --> 0:13:02.600
<v Speaker 1>that are not about trade. Could be about shared defense resources,

0:13:02.600 --> 0:13:05.960
<v Speaker 1>it could be about technology and intelligence. But the most

0:13:05.960 --> 0:13:08.400
<v Speaker 1>important thing I think to take out of this is

0:13:08.440 --> 0:13:11.560
<v Speaker 1>the signal from the US government that even close security

0:13:11.600 --> 0:13:15.160
<v Speaker 1>partners aren't exempt from these sorts of penalties.

0:13:15.480 --> 0:13:18.440
<v Speaker 2>Sam, I do just want to end by asking, and

0:13:18.480 --> 0:13:20.480
<v Speaker 2>you might not know the answer to this, but what

0:13:20.600 --> 0:13:24.440
<v Speaker 2>sort of options does Australia have in its back pocket,

0:13:24.640 --> 0:13:26.760
<v Speaker 2>no matter who the leader, no matter who the government

0:13:26.920 --> 0:13:29.200
<v Speaker 2>of the day is, what sort of options do we

0:13:29.240 --> 0:13:31.839
<v Speaker 2>have when responding to tariff announcements like this?

0:13:32.080 --> 0:13:35.559
<v Speaker 1>Well, I guess, to use your phrasing earlier, Zara, in

0:13:35.600 --> 0:13:38.840
<v Speaker 1>the tit for tat kind of battle here, we could

0:13:38.920 --> 0:13:41.240
<v Speaker 1>hit them back with what they've hit us with and

0:13:41.320 --> 0:13:45.000
<v Speaker 1>do our own retaliatory tariffs. The Prime Minister was asked

0:13:45.000 --> 0:13:48.120
<v Speaker 1>about that yesterday. He said that he would not do

0:13:48.240 --> 0:13:50.400
<v Speaker 1>that and that it would create what he called a

0:13:50.480 --> 0:13:53.400
<v Speaker 1>race to the bottom. He pointed out that Australia's trade

0:13:53.440 --> 0:13:55.840
<v Speaker 1>with the US only accounts for about five percent of

0:13:55.880 --> 0:13:59.560
<v Speaker 1>our exports overall, and that the strength of Australia's economy

0:13:59.600 --> 0:14:02.520
<v Speaker 1>is in the fact that we have diverse trading relationships. Now,

0:14:02.559 --> 0:14:05.600
<v Speaker 1>what that ignores is the fact that it could be

0:14:05.640 --> 0:14:08.280
<v Speaker 1>the weakening of other economies that we're much more reliant on,

0:14:08.400 --> 0:14:12.880
<v Speaker 1>think China, India, Vietnam. If they become weaker because of

0:14:13.080 --> 0:14:16.120
<v Speaker 1>a damaged relationship with us, we're going to feel that indirectly.

0:14:16.760 --> 0:14:19.080
<v Speaker 1>The biggest option available for the government is to try

0:14:19.080 --> 0:14:22.480
<v Speaker 1>and solve this diplomatically, and they're going to try and

0:14:22.560 --> 0:14:26.360
<v Speaker 1>negotiate exemptions based on the things that we've talked about,

0:14:26.360 --> 0:14:30.040
<v Speaker 1>the strong relationships economically, but also in terms of defense.

0:14:30.720 --> 0:14:33.680
<v Speaker 1>The Trade Minister Don Farrell he already indicated he'll be

0:14:33.760 --> 0:14:37.200
<v Speaker 1>reaching out to his American counterparts, and Australia's ambassador to

0:14:37.240 --> 0:14:40.480
<v Speaker 1>the US, former Prime Minister Kevin Rudd, is definitely going

0:14:40.520 --> 0:14:42.440
<v Speaker 1>to be working the phone to try and figure out

0:14:42.600 --> 0:14:45.240
<v Speaker 1>how to get a negotiation meeting at the White House.

0:14:45.240 --> 0:14:48.560
<v Speaker 2>In the diary, so interesting, Sam, Thank you for taking

0:14:48.600 --> 0:14:51.280
<v Speaker 2>us through that, so explaining everything we need to know,

0:14:51.800 --> 0:14:54.640
<v Speaker 2>and thank you for joining us on this episode of

0:14:54.640 --> 0:14:57.800
<v Speaker 2>The Daily OS that wraps up another week of Deep Dives.

0:14:57.880 --> 0:14:59.760
<v Speaker 2>We love giving you the news. We hope you love

0:14:59.800 --> 0:15:01.960
<v Speaker 2>this listening to it. We'll be back later today with

0:15:02.040 --> 0:15:07.880
<v Speaker 2>the headlines, but until then, have a great Friday.

0:15:08.320 --> 0:15:10.680
<v Speaker 1>My name is Lily Maddon. And I'm a proud Arunda

0:15:10.880 --> 0:15:15.680
<v Speaker 1>Bungelung Kalgatin woman from Gadighl country. The Daily oz acknowledges

0:15:15.760 --> 0:15:17.920
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