SYDNEY, AUSTRALIA – Australia Spared Tariff Hike, but Economic Concerns Persist Despite avoiding a direct hit from the latest US tariff announcement, Australia’s economy is still at risk from the indirect impact of the move, which could lead to weaker global growth and reduced demand for Australian exports.
The country’s 10% tariff rate remained unchanged, while other major economies, including India and Canada, faced higher duties.
The news sent the Australian share market plummeting by about 1% as economists warned of the potential economic fallout.
“The bad news is that other countries appear to be facing higher tariffs than many had come to expect, which will push the average US tariff up to around 20%, way up from 2-3% at the start of the year,” said AMP chief economist Shane Oliver.
The concern about the economic damage caused by the tariffs and the accompanying uncertainty was also raised by RBA deputy governor Andrew Hauser, who drew parallels to some of the long-term economic impacts caused by Brexit.
“The level of uncertainty is clearly elevated, and the implications… for a global trading economy like Australia with these fundamental changes are very profound,” he said.
Australia’s reprieve is attributed to its trade deficit with the United States, with the country buying more goods and services from the US than it sells.
The White House reportedly categorized nations into three groups, with those running a trade deficit, like Australia, receiving a 10% tariff rate.
The situation remains uncertain, with the start date of the new tariffs pushed back a week to August 7, and a legal challenge against the duties expected to reach the Supreme Court.
There is also no announcement on what rate the US will slap on Chinese goods, leaving open the chance that tariffs could spike between the world’s two largest economies again when the current pause expires on August 12.
For those seeking more information or wanting to stay updated on the latest developments, the Australian Government’s Department of Foreign Affairs and Trade provides regular updates on trade policies and their implications.