U.S. President Donald Trump has delayed the onset of tariffs to 1 August, to allow for negotiations on trade deals.
Trump first announced a blanket 10% tariff on every country, including Australia, in April.
Certain countries and products were subject to higher rates.
Meanwhile, the federal Productivity Commission has released a report suggesting Australia’s economy could grow under the tariffs.
Tariffs
A tariff is a tax on imports. It’s applied to foreign-made goods brought into another country and paid by the importer.
For example: Country A and Country B make the same product. Country A wants its citizens to buy its own version of the product, not Country B’s, so it applies a tariff.
Importers in Country A now pay the tax when they bring in B’s product, and pass on the cost to consumers, making this version of the product more expensive to buy.
Liberation Day
In April, Trump announced a blanket 10% tariff on all imports to the U.S.
This came into effect on 5 April (Australian time). Australia received the 10% rate.
On top of the 10% tariff, other countries were given higher rates, based on claims that trade with them cost the U.S. money. For example, Indian products were tariffed at 26%.
Trump then announced a 90-day pause on these higher tariffs to enter trade talks with each country.
Few countries have successfully negotiated deals since the 90-day pause was implemented.
The tariff rate has been reduced for cars from the UK. China and the U.S. did place even higher tariffs on each other, but have also since paused that.
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Australia has not secured an exemption, despite talks between senior ministers and their American counterparts.
Prime Minister Anthony Albanese hasn’t directly met Trump, with their planned meeting in Canada at an international summit cancelled.
Extension
The 90-day pause was due to end tomorrow, 9 July.
However, overnight, the White House confirmed Trump has pushed out the implementation of tariffs until 1 August.
Trump’s press secretary Karoline Leavitt told reporters the next few weeks will be spent negotiating with countries to “cut the best deals for the American people.“
Trump has posted a series of letters on social media sent to leaders of various countries announcing a revised tariff deal.
In near-identical formats, Trump outlines his view of trade relations between the country and the U.S, and then announces the new tariff rate.
Japan and South Korea were told they will be hit with 25% tariffs, while Laos received 40%.
Leavitt confirmed all other countries will receive letters with updated tariff deals in the coming weeks.
Australia
The Productivity Commission, an economic advisory body, has published a report suggesting Australia’s economy could grow as a result of the tariffs.
It said countries that are “heavily affected” could choose to increase trade with Australia. Additionally, it could lead to an increase in local Australian manufacturing and production.
The report said if Australia doesn’t reciprocate tariffs with the U.S, Australia’s GDP (the value of goods and services) could rise by 0.35%.
