Trump’s tariffs could deliver a $27bn blow to Australia – and the cost of a global trade war would be far higher
Liberation days signal the end of a war, not the start of one,So it is with rich irony that the US president, Donald Trump, has declared victory even as he massively escalates his attack on the global trading system,As Trump attempted to recast the world’s richest nation as a victim of “perfidious” foreigners who have been taking advantage of the superpower for too long, he unveiled sweeping 10% tariffs on goods imported from Australia,Notably, pharmaceuticals – one of Australia’s top exports to the US – escaped tariffs, as did critical minerals that are not mined in the US,The treasurer, Jim Chalmers, nevertheless declared it “a dark day in the global economy” as he promised to release updated Treasury modelling of how bad the tariffs will be for Australia.
“These escalating trade tensions, these tariffs announced by the Trump administration in Washington DC, are self-defeating, they are self-sabotaging,” Chalmers said.The US only buys about 5% of what Australian businesses sell overseas, but economists say the entire world, and especially trade-exposed nations like Australia, would lose from America raising its protectionist walls to the highest levels since 1909.The chief economist at KPMG, Brendan Rynne, estimates that the average tax rate on US imports is set to soar by more than 18 percentage points.In Rynne’s model, the world economy as a result would shrink by about 0.4%.
And as a country that has depended on trade to drive prosperity, he estimates the new tariffs will deliver a $27bn blow to Australia’s economy, or as much as 1% of GDP.Sign up for the Afternoon Update: Election 2025 email newsletterWith tariffs on US imports from China – our largest trading partner – jumping over 50%, even that estimate may prove too optimistic, he says.“We’re a medium-sized, open economy that is dependent on world trade for our economic prosperity.In essence this is shaking up world trade, and how this all plays out will be difficult to say.”Australian consumers could also face a brief lift in prices.
“We get an inflation pulse of about 1%, but it comes and goes very quickly,” Rynne says,Experts agree that the prognosis for America’s economy and its consumers is potentially much more severe,But with Trump having signalled he plans to use higher tariff revenue to pay for big tax cuts, it’s an open question whether his trade aggression will hurt the president’s popularity at home and his determination to use tariff policy as a tool to “make America great again”,“We are in a big experiment where we are judging rhetoric against logic – and we will find out soon enough which one’s the winner,” Rynne says,Soon after the announcement in the White House Rose Garden, the US treasury secretary, Scott Bessent, warned other nations against hitting back with tariffs of their own.
“This is the high end of the number barring retaliation.As far as negotiations go – we’ll see,” Bessent told Bloomberg.Australia has escaped relatively lightly with no additional “reciprocal” levies, as other putative allies have been treated substantially worse.Japan and the EU were hit with across-the-board imposts of 20% and 24%, respectively.Meanwhile, taxes on Chinese imports will rise by 34 percentage points to 54% in the latest announcement, according to Bloomberg.
China has since vowed to respond in an unspecified way.Sign up to Afternoon Update: Election 2025Our Australian afternoon update breaks down the key election campaign stories of the day, telling you what’s happening and why it mattersafter newsletter promotionWhat this means for China – which buys the lion’s share of Australia’s total exports – matters hugely for how the Australian economy weathers this storm.While Treasury officials have estimated a relatively minor hit to growth at home from higher US tariffs, they have emphasised that the indirect hit to the economy from the knock-on effects of a possible global trade war could be far higher.The chief economist of AMP, Shane Oliver, says his initial calculation is that US levies as a percentage of its total imports would jump from under 5% to nearly 25%.Oliver estimates the risk of a US recession is now 40%, and that global growth would drop from 3% towards 2% “depending on how significant retaliation is and how countries like China respond with policy stimulus”.
Preliminary modelling by another economist, who spoke to Guardian Australia but was unwilling to go on the record, showed the US slumping into recession for the rest of 2025 as inflation shot higher and consumer spending collapsed,Countries around the world are grappling with how to respond to Trump, cobbling together policies mixed with diplomacy and flattery to reduce the likelihood of becoming a target,Some, including China, have devised retaliatory packages to demonstrate they are capable of causing the US pain, while others are seeking to give concessions that are domestically palatable,Wesley Widmaier, a professor of international relations at the Australian National University, says Australia has historically been successful in playing the long game,“Australia can keep the powder dry and play the transactional game that it’s always been very smart in playing by letting other countries kick up more dust,” Widmaier says.
Trump in his opening speech suggested that Australian beef would be banned, but this proved to be a rhetorical flourish and the 10% levy will apply to our largest export to the US.Australia accounts for about a quarter of US beef imports, and the additional levy comes at a time when American beef buyers have become increasingly reliant on overseas sellers.Thanks to drought, American cattle numbers have dropped to multi-decade lows, and local producers can’t keep up with a rise in demand.No surprise, then, that Australian imports have reached record levels in 2025 – up 30% so far compared with last year.Prices are 16% higher than a year earlier.
It appears that Canadian and Mexican exporters have escaped additional levies, but still face higher tariffs under a previous round.And America’s need for imported beef will probably only rise this year as US farmers rebuild their stock numbers.Dennis Voznesenski, an agricultural economist at CBA, says these factors suggest beef prices would hold up through 2025 and American buyers will bear the burden of higher taxes on imported meat.“While the tariffs are unquestionably a negative (for Australian producers), the constrained state of US cattle availability and possible herd rebuild will mean that the tariff burden will likely be spread between both exporters and the US until the US can rebalance its domestic cattle supply,” Voznesenski says.Patrick Commins is economics editor and Jonathan Barrett is business editor of Guardian Australia
Tata redundancy scheme targeted older, non-Indian nationals in UK, tribunal hears
A UK division of the Indian conglomerate Tata “deliberately orchestrated” a redundancy programme in a way that unfairly targeted older, non-Indian nationals, an employment tribunal has heard.Three claimants allege the Mumbai-based Tata Consultancy Services (TCS), which is valued at almost £110bn on the BSE stock exchange in Mumbai, discriminated against them on grounds of age and nationality during a restructuring that began in mid-2023.The case mirrors a similar claim brought in the US, where at least 22 workers have alleged that TCS sacked them at short notice and replaced many of them with workers from India on H1-B visas, used for hiring staff with specialist skills.TCS denies both claims. It is part of the Tata group of companies, which includes Tetley Tea and Jaguar Land Rover
What Trump’s tariffs could mean for UK consumers
Donald Trump’s announcement that the US will put tariffs on goods from around the world, including a 10% charge on UK imports, has signalled the start of a global trade war.Although the UK faces a lower tariff than many other countries, for UK consumers there could still be some fallout. How it all plays out remains unclear.As it stands, the UK has not announced any retaliatory tariffs, so no US imports will leap in price. But if the government does decide to respond in kind, the prices of goods we buy in from the US could go up
Percy Pig’s US adventure may be short-lived as M&S responds to Trump tariffs
Percy Pig’s US invasion could be called to a halt amid fears that Donald Trump’s tariffs could affect sales of Marks & Spencer’s popular confectionery brand which has just launched in Target stores across the Atlantic.Archie Norman, the chair of M&S, has described Percy as the retailer’s “gift to America” but he told the Retail Technology Show in London that “we might have to change our minds” as Trump imposes additional taxes on imported goods. While M&S is not considering withdrawing the sweets, tariffs could push up prices and make them less popular.The pink confectionery which sells more than 18m bags a year in the UK and is apparently enjoyed by celebrities including Adele and Olivia Rodrigo, went on sale in the US on 30 March both in Target stores across the US and on its website in what was described as Percy’s “biggest journey to date”.The US president on Wednesday announced sweeping tariffs on imports, including a 10% tariff on those coming from the UK
Co-op to open at least 120 more grocery shops after profits rise five-fold
The Co-operative Group plans to open at least a further 120 grocery shops this year after profits rose more than fivefold, but told the government that “layering costs” on retailers could hit high streets and communities.The mutual, which owns more than 800 funeral parlours and an insurance and legal advisory business as well as operating more than 2,000 convenience shops, said changes to employers’ national insurance contributions (NICs) and packaging regulations were expected to add £80m to its costs this year. It also lost £80m to shoplifters last year despite spending millions on new security measures.The business is introducing technology including electronic shelf-edge pricing and expanding its fast-track online grocery deliveries – where sales soared 46% last year to £460m – to help offset higher labour costs.The Co-op’s chief executive, Shirine Khoury-Haq, said: “We understand the government has a tough job, but it should look at layering of costs on the industry so it doesn’t tip over the balance and impact high streets
Luton airport allowed to double capacity after UK government overrules planners
Luton airport will be allowed to almost double in capacity after the government overruled planning inspectors who recommended blocking the scheme on environmental grounds.The transport secretary, Heidi Alexander, granted a development consent order for the airport’s plans to expand its perimeter and add a new terminal, allowing for a potential 32 million passengers a year.The approval comes despite concerns raised about ancient trees and the impact of more flights on the Chilterns, an area of outstanding natural beauty.Labour sources, however, said the promise of thousands of additional jobs had outweighed environmental considerations.Luton airport is also ultimately owned by the local council, meaning that a greater share of its profits are put back into local services
Zonal electricity pricing plan could add £3bn a year to GB bills, report finds
Plans to overhaul England, Wales and Scotland’s electricity market risk piling an extra £3bn on to household energy bills every year until the 2040s, according to the government’s own clean power adviser.New research has found that moving ahead with a plan to divide the national electricity market into different pricing zones could drive up the cost of building new windfarms as the government aims for a renewable energy boom before the end of the decade.Ed Miliband, the energy secretary, hopes to double Great Britain’s onshore wind capacity, triple solar and quadruple offshore wind farms to help create a clean power system by 2030.But uncertainty over the plans for “postcode electricity pricing” could mean that developers of renewable energy demand higher subsidies to offset the risk, according to the research, which could raise household energy bills or even delay clean energy investments.The report by the UK Energy Research Centre (UKERC) warned that an upcoming auction for renewable energy subsidy contracts could clear at £20 per megawatt-hour higher than expected if the zonal market plans were adopted
Conversation on assisted dying ends if bill voted down, says MP
Don’t reinforce the idea that grown men don’t cry | Brief letters
Young women in England and Wales projected to have just one child by 35
Study finds strongest evidence yet that shingles vaccine helps cut dementia risk
Patient satisfaction with NHS has hit record low of 21%, survey finds
Lowering bad cholesterol may cut risk of dementia by 26%, study suggests