The Trump administration has revealed plans to impose an additional 12.5 per cent tariff on Australian exports, along with those from 60 other countries, over an alleged failure to prevent the importation of goods made with forced labour.
New Tariff Details
United States President Donald Trump intends to hit Australian exports with this new tariff, which comes on top of the existing baseline 10 per cent import surcharge applied to most Australian goods. The announcement lists Australia among 60 nations accused of not effectively enforcing prohibitions on forced labour imports, and the US is now seeking submissions on the proposal.
Background of the Investigation
In March, the US Trade Representative initiated 60 investigations into various economies regarding their alleged failure to impose and enforce a ban on importing goods produced with forced labour. Ambassador Jamieson Greer stated, "The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field. We will no longer tolerate this disparity." He added that while some partners have taken initial steps through agreements like USMCA, more action is required to prevent trade from encouraging forced labour.
US importers and consumers ultimately bear the cost of these tariffs. It is estimated that the Trump tariffs amount to an average tax increase of $1,000 per US household. Under the current tariff regime, the US is projected to raise approximately $956 billion in revenue from 2026 to 2035.
US Report on Australia
The announcement was accompanied by a report outlining the reasons for the change, specifically citing Australia's failure to impose and effectively enforce a forced labour import prohibition. The report stated that this failure is unreasonable and burdens or restricts US commerce.
Australian Government Response
Trade Minister Don Farrell responded, stating that "Australia maintains our position that any tariffs on Australian exports to the United States are unjustified and inconsistent with our free trade agreement." He emphasised that "Australia has robust, comprehensive and world leading legislation addressing forced labour and modern slavery." Farrell added, "We continue to use every opportunity to advocate that US tariffs imposed on Australia are unwarranted."
Government sources indicated that the proposed new tariffs are likely designed to replace the temporary 10 per cent tariffs that expire in July. This suggests the US is either increasing the tariff to 12.5 per cent or establishing a negotiating position where Australia might reduce the tariff back to 10 per cent.
