Prime Minister Malcolm Turnbull has confirmed Mr Trump will exempt Australia from the steel and alumunium tariffs he is about to impose on most of the world.
After ongoing discussion between the two nations, both leaders confirmed the exemption via social media on Saturday morning. Mr Trump took to Twitter to say he’d spoken with the prime minister.
“Working very quickly on a security agreement so we don’t have to impose steel or aluminium tariffs on our ally, the great nation of Australia!” he tweeted.
Spoke to PM @TurnbullMalcolm of Australia. He is committed to having a very fair and reciprocal military and trade relationship. Working very quickly on a security agreement so we don’t have to impose steel or aluminum tariffs on our ally, the great nation of Australia!
— Donald J. Trump (@realDonaldTrump) March 9, 2018
In response, the Prime Minister also tweeted about the conversation, writing: “Great discussion today on security and trade. Australia/US trade is fair reciprocal each of our nations has no closer ally.
“Thank you for confirming new tariffs won’t have to be imposed on Australian steel aluminium — good for jobs in Australia and in US!”
An exemption for Australia would certainly be good news, but two words that went largely unnoticed in Mr Trump’s tweet raised eyebrows.
What “security agreement” was the president referring to – and did he mean Australia will need to concede something in return for the tariff exemption?
Mr Turnbull has shot down that suggestion.
“No, there is no um, nothing of that kind,” he said yesterday. “The reference to the security agreement in his tweet is shorthand for the legal paperwork that has to follow through a proclamation in accordance with an executive order.”
The Prime Minister did stress that Australia has “the closest possible military and security alliance with the United States, and it gets closer all the time”. He said the two countries had discussed closer cooperation on cybersecurity during his recent trip to Washington.
ah. turnbull in damage control. “when he said ‘military’ and ‘security’ he just meant …paperwork”
— Scott Ludlam (@Scottludlam) March 10, 2018
Mr Turnbull said Mr Trump had acknowledged the trade relationship between Australia and the US was a fair and reciprocal one.
“It’s a level playing field. In fact, the US has a large trade surplus with Australia,” Mr Turnbull told reporters in South Australia.
Earlier Mr Trump took to Twitter to praise Australia’s commitment to a fair and reciprocal trade and military relationship.
“Working very quickly on a security agreement so we don’t have to impose steel or aluminium tariffs on our ally, the great nation of Australia!”
US trading partners were on Friday given a 15 day window to negotiate exemptions to the tariffs, due to come into effect in a fortnight.
But Australian Industry Group Chief Executive Innes Willox said the tariff announcement would still hurt companies even if an exemption was granted. “While we hope that Australia will win exemptions from the latest steel and aluminium tariffs, this would be only a partial victory,” Mr Willox said on Friday.
He said any special treatment afforded to Australia would only apply to shipments coming out of the country, and not to those from Australian companies in third markets.
“As a country with a high reliance on trade, the risks of broader damage to the global economy from a trade war are great,” Mr Willox said.
Former prime minister Kevin Rudd said that even if Australia secured an exemption, a global tit-for-tat was a concern. He disagreed with Mr Trump’s belief that trade wars are good.
“History tells us they are bad, and they end up causing not just a contraction in global trade but, as a result of that, a contraction in global growth,” he told ABC on Saturday.
The news comes after Trump signed an order for the 25 per cent tariffs on steel imports and 10 per cent for aluminium at the White House on Thursday to counter cheap imports, especially from China, which he described as “an assault on our country”.
However, he said “real friends” of the US could win waivers from the measures, which come into force after 15 days. In the event he exempted Canada and Mexico, fellow members of the North American Free Trade Agreement which he is trying to renegotiate.
Brazil, which after Canada is the biggest steel supplier to the US market, said it wanted to join the list. Argentina made a similar case.
Japan, the US’s top economic and military ally in Asia, was next in line. Chief Cabinet Secretary Yoshihide Suga told a news conference that Japan’s steel and aluminium shipments posed no threat to US national security.
The European Union, the world’s biggest trade bloc, chimed in. “Europe is certainly not a threat to American internal security so we expect to be excluded,” European trade Commissioner Cecilia Malmstrom said in Brussels.
Ms Malmstrom told reporters the EU was ready to complain to the World Trade Organisation, and retaliate within 90 days. She will meet US Trade Representative Robert Lighthizer and Japanese Trade Minister Hiroshige Seko in Brussels on Saturday when she will ask whether the EU is to be included in the tariffs.
Other officials at the EU, by far the biggest trading partner of the US by value, have warned it could take countermeasures including European tariffs on US oranges, tobacco and bourbon.
Brussels has reminded Trump that tit-for-tat trade measures deepened the Great Depression in the 1930s and in the 2000s cost thousands of US jobs when Washington imposed tariffs on European steel.
In Sydney, Prime Minister Malcolm Turnbull cited Washington’s strong relationship with Australia, adding: “There is no case for imposing tariffs on Australian steel.”
Trade tensions between Washington and Beijing have risen since Trump took office last year. China accounts for only a small fraction of US steel imports, but its rapid rise to produce half the world’s steel has helped create a global glut that has driven down prices.
Beijing vowed to “firmly defend its legitimate rights and interests”. The tariffs would “seriously impact the normal order of international trade,” the Ministry of Commerce said.
China’s steel and metals associations urged the government to retaliate, citing imports from the US ranging from stainless steel to coal, agricultural products and electronics. It was the most explicit threat yet from the country in the escalating trade row.