A United States tariff of 12.5 per cent on Australian goods took effect at 2.01pm AEST on Friday, lifting the rate from the 10 per cent surcharge that had applied for more than a year.
The increase was set out in a presidential memorandum covering 60 economies. Its stated basis is a finding that those countries have not properly enforced prohibitions on importing goods made with forced labour. Australia sits in the 12.5 per cent band alongside more than 40 other economies, among them China, Japan, South Korea, New Zealand, Brazil and Vietnam. Beef, gold and copper are exempt.
United States Trade Representative Jamieson Greer said decades of moral suasion had not eradicated forced labour from global supply chains.
Trade Minister Don Farrell rejected the finding. "The Albanese government believes that this imposition of higher tariffs on Australia is completely unjustified, and we will continue to lobby the United States trade representative to remove all tariffs on Australian goods," he said. "We believe that amongst all of the countries in the world, Australia does take the issue of modern slavery seriously and will continue to do that."
Australia strengthened its modern slavery laws earlier this month, adding criminal offences and civil penalties for companies with annual revenue above $100 million. The two countries have had a free trade agreement in force since 2005, under which most goods move between them duty free.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, called the decision ludicrous and said the United States had walked away from its obligations under that agreement. "Australia has some of the highest protections and enforcement against modern slavery anywhere in the world," he said.
Business Council of Australia chief executive Bran Black said the decision was disappointing, and that the trade representative's finding did not identify an enforcement failure or put a number on the trade effect it was meant to address.
Luke Branson, EY's global trade leader for Oceania, estimated the higher rate would cost about $1.6 billion a year. That is an estimate rather than a measured figure, and the cost does not fall evenly. Exporters outside the three exempt commodities pay it.
The National Farmers' Federation said the United States had chosen higher trade barriers despite Australia's record of high standards and responsible trade.
Canberra's response is lobbying. Farrell has not announced countermeasures and no reciprocal tariff has been proposed. The rate applies now, and the same memorandum set lower rates for several European economies.
