'Tariff man' wins: What does this mean for F&B industry?

The Republican Party Platform included a commitment to stop outsourcing, and protect American businesses from unfair trade. With a trade deficit in the US of over US$1 trillion, the Republicans’ campaign included support for baseline 10% or more tariffs across all foreign-made goods, with up to 60% tariffs indicated for Chinese imports.

With Australia’s current free trade agreement covering around AU$16bn worth of Australian goods exported to the US each year, many industries may be concerned.

Innes Willox, Chief Executive of the national employer association, Australian Industry Group, said that Donald Trump’s election win creates some challenges for Australia.

“As a key strategic partner and ally of the United States, Australian prosperity has long relied on stable policy settings which have promoted openness and rejected widespread tariffs and protectionism,” Willox said.

He continued, “...the government must work to exempt Australia from the expected across-the-board tariff increases threatened by the returning President. Australia has benefited for over 20 years from its Free Trade Agreement with the United States which has facilitated the movement of goods, services, capital and people between our two countries. To jeopardise that agreement would be to imperil the prosperity and success of Australian businesses and their employees across the economy.

“Allied to that, Australia must continue to stand up against rampant protectionism which only serves to create inefficiencies, sustain high inflation, stifle innovation and embed unemployment. Mr Trump clearly wants to promote local business interests as all governments should, but building tariff walls is a dead-end road.”

Australia could also be at risk of becoming collateral damage in a prolonged trade war between the United States and China, Willox said. “Our economy continues to be heavily reliant on technology from the US and on China as a market and a supplier and it is likely that if the Trump administration pushes ahead with a 60% tariff on Chinese goods, Australian businesses would be collateral damage.

“Australian businesses are already reporting market distortions being created in expectation of a US–China trade dispute. This includes increased shipping costs and delays in shipments caused by increased trade between the two nations ahead of the election. Given our strong trade and investment links with both countries, Australia risks being particularly damaged by a trade dispute.”

However, even though these import plans were part of the pitch from the self-named ‘tariff man’, it is still only conjecture at this stage because many of the plans he announced before becoming the 45th President never eventuated. For example, Trump tried to withdraw the US from climate diplomacy during his first presidency, but state and local governments overruled. He has again threatened to withdraw the United States from the Paris Climate Agreement so we will have to wait and see what eventuates this time.

Willox said: “Australian industry will be keenly watching how Australia is positioned with the new administration to protect us from the inevitable shockwaves of the expected Trump economic approach. We hope and expect that the Australian Government, before and after our election next year, as well as our diplomatic representatives in the United States will be able to protect Australia’s interests at a time of significant change.

“For the past 80 years, what happens in the United States particularly matters to Australian prosperity given our deep economic and security ties. The next four years will be no different.”

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