Extract from ABC News
Business owner Steve Philpott is one of many Australian exporters that will need to navigate the economic environment carefully over the coming weeks and months. (ABC News: Daniel Irvine)
In short:
Business groups have expressed concern about the uncertainties that lay ahead of Australian exporters.
The US Supreme Court decided to invalidate many of Donald Trump's so-called "reciprocal" tariff hikes, leading the American president to announce a 15 per cent tariff on all imports.
What's next?
The court ruling has left open the possibility that the US government could need to pay back the billions in tariff revenue it has already collected.
The business community has expressed deep concern about US trade policy uncertainty, with the highest American court striking down tariffs, leading Donald Trump to announce a 15 per cent levy across the board.
The US Supreme Court voted to invalidate many of the US president's tariff hikes, which targeted particular countries with steep tariffs.
Instead, Mr Trump said goods imported into the US will be hit with a 15 per cent tariff, but some products will be exempt, such as critical minerals, metals and pharmaceuticals.
Separate tariffs on steel, aluminium, lumber and automotives — introduced using a different US law — remain in place because they are unaffected by the Supreme Court's ruling.
Chief executive of the Australian Chamber of Commerce and Industry, Andrew McKellar, said while the decision was "expected", it "throws a number of things into uncertainty".
"The US administration won't give up [on its trade policy agenda]," Mr McKellar said.
'Here we go again'
Swimwear business owner Steve Philpott is one of many Australian exporters that will need to navigate the economic environment carefully over the coming weeks and months.
"I just kind of laughed to myself and [thought] 'here we go again'.
"We're the importer, so we import to the US and it usually clears in California," the boss of Bond Eye swimwear told ABC News.
"We have definitely paid in excess of $1 million in tariffs.
"We have to absorb that [so] we have to get smarter in how we do things."
Mr Philpott said Bond Eye's latest shipment has already cleared customs and the swimwear business is "just figuring it out as we go".
ACCI's Mr McKellar said many businesses could be caught out by the "complex" situation in coming weeks.
"[Businesses] should continue to work with government in a calm and methodical way," he said.
Writing contracts and agreeing to commercial terms has now become particularly challenging in light of the policy changes, the business lobbyist said.
"[Exporters] can put something on a plane and something can change mid-air.
"Where does the liability rest in that situation?"
Heightened economic uncertainty ahead
Economists have warned heightened uncertainty could persist for months to come.
"Even the latest lift in tariffs requires congressional approval within five months," Betashares chief economist David Bassanese said, referring to the 15 per cent tariff Mr Trump announced after his Supreme Court defeat.
"With Republicans having only slim majority, the omens are not good.
"It will only require a few congressional members to find their backbone in the same way that a majority of Supreme Court judges have done."
Mr Bassanese said the US administration may well go down the path of implementing a range of sector-specific tariffs to address perceived unfair trade practices aboard.
But this may well "be more piecemeal — and would seem to rule out the continued use of across the board national tariffs threats for pure political coercion," he said.
"What's more, as we've seen with the Greenland threats earlier this year, Trump may well face greater global retaliation if he seeks to reopen trade deals through the launch of more tariff threats."
Fashion business founder Tom Wilson says the timing of any possible tariff refunds from the US would be critical for his cashflow. (ABC News: Dean Caton)
Tariff payback?
A question also remains about whether the US government will need to pay back the billions in tariff revenue it has already collected in light on the Supreme Court ruling.
Fashion business founder Tom Wilson said the timing of any possible tariff refunds would be critical for his cashflow.
"It is insane to think a US president has stolen money from me," the owner of swim shirt label The Nashie said of the impact of the tariffs.
"[It's] not something I thought was on the cards this year."
The timing of any import tariff refund to Australian businesses, Mr Bassanese said, "will likely depend on further court disputation".
In terms of what it means for the US government's budget, Mr Bassanese said the 15 per cent tariff, even if only temporary, "will make up for revenue shortfalls for the next few months".
Over the longer-run, it now seems likely that tariff revenue will not be able to offset the budget revenue loss from Mr Trump's other key policy since his return to office — the so-called "big beautiful bill", legislating tax cuts and spending.
"This will leave the US budget position as perilous as ever," Mr Bassanese warned.
Market analysts have said they are watching global bond markets to see if the latest tariff developments are reigniting concerns over the US budget position.
A sharp increase in bond yields, as a result of bond selling, would point to potential concerns over the US government's ability to service its debt.
"The other key market implication is that Trump's likely efforts to reinstitute his tariff strategy — one way or another — risks re-stoking global trade tensions, and in an environment in which trading partners may now feel more emboldened to threaten retaliation," David Bassanese said.
The Australian Industry Group (AIG) has called for this year's G20 to focus on garnering support for a single global economic agenda, to reduce business stress.
"Almost 20 years ago the top 20 economies came together to collectively respond to the global financial crisis," AIG CEO Innes Willox told the ABC.
"The US is host of the G20 this year, and the rules based trading system needs to be on the agenda.
"Businesses capacity to endure this kind of economic volatility is diminishing."
No comments:
Post a Comment