Australian farmers and some of the nation’s biggest companies could face the burden of significant tariffs on goods exported to the United States from next year.

US President-elect Donald Trump successfully campaigned on a promise to introduce an across-the-board tariff of either 10 or 20 per cent, which would represent a dramatic shake-up of current trade arrangements.

Andy Stoeckel, an honorary professor at the Australian National University and a former head of the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), said Mr Trump’s strategy could lead the world into a protectionist era.

“Protectionism is bad,” Dr Stoeckelsaid.

According to the Department of Foreign Affairs and Trade, 96.1 per cent of Australian exports to the US are tariff-free under a 20-year-old free trade deal.

The two-way trade is worth $115 billion, with exports from Australia worth $32 billion, according to ABARES.

Those goods include raw materials like iron ore, coal, gold, steel, beef, and sheep and goat meat.

A global tariff could affect as many as 12,000 Australian companies — based on figures from the Department of Foreign Affairs and Trade — including Woodside, Westfield, Brambles, Atlassian, Worley, Visy, Bluestone Lane, Rio Tinto, and Tritium.

The Australian embassy estimates there are about 150,000 people working for Australian companies in the US.

How tariffs work

A US tariff on Australian goods would be paid by US importers and make our products and raw materials more expensive.

Donald Trump introduced tariffs on about 14 per cent of imports during his first term as president.

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The US International Trade Commission (ITC), an independent agency that advises the US government on trade, found that the cost was generally passed on to US consumers.

According to the ITC, the policy resulted in an increase in US manufacturing, but it also raised costs for manufacturers and added to inflation.

Australia is an ally of the US, but that doesn’t mean we would be exempted.

Tariff on Chinese imports ‘big issue’ for Australia

Iron ore and coal generate more than half of Australia’s export revenue globally, and when you add other minerals, it increases to more than 70 per cent.

The US is a major market for Australian minerals including, gold, iron ore and steel and Australian mining companies like Rio Tinto, BHP Northern Resources, Alcoa Australia, and Whitehaven have operations there.

University of Sydney Economics lecturer Vladimir Tyazhelnikov said he had concerns about the 10 per cent import tax.

 But he said a potentially bigger issue was the 60 per cent tariff on Chinese imports that Trump had proposed.

Import tax on beef could impact food prices 

Australian beef exports to the US have tripled in the last few years to about $300 million, and Australia is now the second biggest supplier of beef to the US.

The US has been reducing its own herd for five years now due to ongoing dry conditions, so cattle prices in the US are at near record levels and Australian beef is relatively cheap by comparison.

Rabo Bank’s head of research Stefan Vogel said Trump would be cautious about beef because he also wanted to bring down food prices. 

“So that’ll be a discussion somewhere down the road.”

Dennis Voznesenski, an agriculture economist for the Commonwealth Bank, said it would come down to what Australia could negotiate.

“If Australia receives exemptions care of our free trade agreement, this should be a non-issue,” he said.

 “But If there is no exemption, Australian beef exports will suffer.”

Threat to sheep markets

Australian mutton is in huge demand around the world, and in October, a record 36,703 tonnes was exported, the largest amount in 30 years. 

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According to Meat and Livestock Australia, the US is the largest market for Australian beef and lamb, while China is the largest market for mutton. 

NSW sheep producer Terry Norton is worried about Trump’s plans and how they might affect trade.

“It’s too erratic,” he said.

The US is not a big market for Australian grain but Shona Galwel, the chief executive of national farmers group GrainGrowers, said an open, rules-based trading system was still important.

“A move towards protectionist policies could exacerbate US-China tensions … and further fragment the rules-based global trading order,” she said.