Don’t get angry, just get ahead

“That’s not correct, Mr President, this table demonstrates the length and scale of the US trade surplus over Australia.”

"The real danger lies in the global economic impacts and global reactions, especially overreactions.”

With these words, I handed over one of five big, simple graphs we had taken to the dinner.

The evening was in an Osaka hotel held on the margins of a G20 leaders meeting between then prime minister Scott Morrison, fresh off his 2019 election victory, and President Donald Trump in the second half of his first term.

The President had just claimed that Australia had a trade surplus over the US, which was a misunderstanding we were eager to correct.

This exchange was just one piece in a much broader effort to preserve the exemption won by the Turnbull government for Australia to the global application of steel and aluminium tariffs by the first Trump administration.

Our tactics worked. The efforts of Trump influencers like Robert Lighthizer and Peter Navarro to convince the president to revoke Australia’s exemption failed, on that occasion. But not this time.

Navarro, who went to jail over his refusal to co-operate with Congressional investigations into the president, came prepared for his return to another trade policy role in the second Trump administration. He was never going to allow a second coming of those exemptions and, as is clear from his public statements, he used evidence of Australia benefiting from those previous exemptions to spike all efforts to secure them again. The exemptions matter to a handful of Australian business interests and were an important symbol of Australian influence in Washington but losing them will barely rate a blip on our economy or trade overall. Aluminium and steel exports to the US made up just 0.2 per cent of Australia’s total goods exports in 2024.

Of far greater concern is what’s to come, and its broader impact. The planned reciprocal tariffs, to be applied to all countries, pose a far greater threat to Australian interests, and could create even greater global disruption.

Hold onto your hats for April 2, when every US trade policy grievance against every other nation will begin to be bottled up into retaliatory tariffs that could spark waves of disruption. It’s unlikely to all come at once, and Australia may or may not appear in the first waves, but much broader trade disruption is to come.

How bad the disruption will be will depend on the reactions to US actions, and whether responses are as bitterly fought as the forerunner battle between Canada and the US is currently being slugged out. A widespread repeat of these tit-for-tat trade impediments would be seriously damaging for the global economy overall.

Every indication is that the provocation from the US will be there. Navarro has said the administration will aggregate its assessment of both tariff and non-tariff measures applied by other nations against the US into a “one number” single-rate reciprocal tariff applied against each of those countries.

In Australia’s case there are a number of US grievances at risk of being weaponised. Some date back 20 years to the Australia US Free Trade Agreement, such as the operation of the Pharmaceutical Benefits Scheme and the application of minimum Australian media content rules.

US media concerns are now amplified into new domains as a result of increased government interventions applied to the standards, content and taxation strategies of tech and social media giants. At the other end of regulatory spectrum, Australia’s tough biosecurity laws are an irritant raised by many of our trading partners, while the administration has also cited value added taxes, such as our GST, as alleged trade barriers worthy of revenge.

Across each of these Australian policies there are sound arguments why they don’t warrant the application of so-called reciprocal tariffs by President Trump. Yet there is every risk those arguments will fall on deaf ears, just as the sound arguments against applying steel or aluminium tariffs have been ignored this week.

Will that result in a 5 per cent, 10 per cent or 25 per cent tariff against all Australian goods entering the US? Who knows, given the absence of transparency, methodology or good economics to these policy decisions.

Logically, a broader tariff on potentially all Australian goods going into the US will hurt more than the elimination of any exemption from the steel and aluminium tariffs. But it should still be kept in perspective, with the US accounting for less than five per cent of Australia’s goods exports.

The real danger lies in the global economic impacts and global reactions, especially overreactions. Our response should be rooted in the adage “Don’t get angry, don’t get even, get ahead.”

Australia must stand up for good policy but avoid self-harming overreaction. We shouldn’t let anger jeopardise critical security and investment relationships. We cannot let a desire to get even see us make matters worse by driving ourselves into a tit-for-tat trade war.

We must get ahead, by continuing to open our nation up to easier trade flows and faster investment flows that ultimately prove the Trump model wrong.

Simon Birmingham is Head of Asia Pacific Engagement and Chairman, South Australia, at ANZ. He is a former Federal trade minister.

This article originally appeared in the Australian Financial Review on March 12, 2025