Late Tuesday, U.S. President Donald Trump’s trade adviser, Peter Navarro, had some strong words for Australia, accusing it of disrupting the aluminum market. This came on the heels of President Trump signing executive orders that place tariffs on certain metal imports. Australia is now striving to obtain exemptions from these new steel and aluminum taxes.
On Monday, Trump signed these executive orders, which will enforce a 25% tariff on steel and aluminum imports to the U.S. beginning March 12.
### Market Reaction
In terms of market shifts, the AUD/USD pair has dipped by 0.07% today, currently trading at 0.6292.
#### Frequently Asked Questions on Tariffs
Tariffs are essentially taxes imposed on specific imports or categories of goods. Their main purpose is to bolster local industries by creating a price advantage over foreign imports. Alongside trade barriers and import quotas, tariffs function as a tool for protectionism.
While both tariffs and taxes contribute to government revenue for public services, they differ significantly. Tariffs are paid upfront at ports of entry, whereas taxes are collected at purchase points. Additionally, taxes apply to individuals and businesses, while tariffs are shouldered by importers.
In the economic world, there’s ongoing debate about tariffs. Some experts assert that tariffs are vital for safeguarding domestic industries and adjusting trade imbalances. However, others caution that they could lead to increased prices in the long run and spark retaliatory trade wars due to reciprocal tariffs.
Leading up to the November 2024 presidential election, Donald Trump made it clear that tariffs are central to his plan for boosting the U.S. economy and supporting American industries. In 2024, the U.S. Census Bureau reported that Mexico, China, and Canada together accounted for 42% of all U.S. imports, with Mexico being the top exporter at $466.6 billion. Trump’s strategy includes targeting these countries with tariffs and utilizing the revenue to reduce personal income taxes.
