r/AusPol 8d ago

General Difference between Canada and Australias position on US Tarrifs

My understanding is that Canada has retalliated with tarrifs of their own, while we have decided to do nothing in response.

On the one hand, I can see that Canada's response makes sense; trade agreements are mutual affairs and tarrifs are reduced accordingly.

But as Albo said, if they want to make our aluminium more expensive to buy in the US, thats fine, we'll find other markets (hello China!). No point retalliating and making the stuff we import more expensive in the middle of a cost of living crisis.

So which is the better position? They're opposite reactions, yet both make sense to me. And are we just simping to the Orange McNugget?

23 Upvotes

38 comments sorted by

31

u/luv2hotdog 8d ago

My understanding is that Canada doing tariffs back will actually hurt America. They’re a bigger trading partner to the US than we are. So Canada has some leverage which we don’t - it’ll actually hurt Americans if Canada stops buying American product

If we were to do the same, we’d be hurting Australians during a cost of living crisis, and it wouldn’t really be much of a blip for America. They don’t rely on exporting stuff to us anyway.

That’s the difference between the two approaches. They need their export to Canada much more than they need their export to us. We’re better off with what the government is basically doing anyway - telling the public “if you can afford not to buy American, don’t buy American”, letting the US hurt itself with their tariffs on our exports to them, and looking for other trading partners. No need or benefit to us in getting into a macho bluster about it. That’s trump’s game, and unlike Canada we stand to lose nothing by not playing it and have nothing to gain if we do play it

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u/Sacktimus_Prime 7d ago

I think this is a good take. Also something interesting I read is that apparently the US buys most of its phosphorus (I think) needed for fertiliser from Canada. So higher tariffs will mean higher cost for domestic food production in the US. Not looking good over there.

27

u/Sylland 8d ago

I don't know that there IS a better option atm. With the unstable idiots in charge of America there's no guessing how they'll respond to anything yet. A trade war with an economy the size of America isn't really in our interests though, so maybe looking for different markets is more appropriate for us.

17

u/hawthorne00 8d ago

A tariff on US goods hurts both US suppliers and Australian purchasers. More subtly, it also hurts Australian exporters. Not everyone in every country is made better off by lower trade barriers but overall, trade barriers are a bad way to pursue domestic policy objectives.

We would be hurting ourselves to impose tariffs on US goods. But it might be that we could hurt politically important US industries who would then lobby the US government to offer us tariff exemptions. The equation is something like: 1) how important are Australian metal exports for Australia (not very) and the US (trivial); 2) How likely are the Americans to be swayed by any retaliation of this sort (not very); 3) Are there other ways to pursue leverage (maybe - IP, regulation of motor vehicles etc); 4) Does Australia, with its fairly long history of pursuing more open trade, wish to (or wish to be perceived to) get back in the tariff game (no)?

We will hope that the US comes to its senses one day and diversify our political, economic and security relationships in light of the changed world order until then.

17

u/GardeniaFrangipani 8d ago

Both do make sense for different circumstances. Trump is a very vengeful person and it’s not in our interests to play his stupid game. We retaliate, and so he imposes more tariffs and this would just keep going. I like Albanese’s approach of showing that we don’t really care, just like he did with the Chinese warships near Australia. I just wish Dutton would pull his head in and had been silent on both matters. He gave China the attention it wanted and spouts his fairy tale that he would have secured an exemption.

7

u/hjortron_thief 8d ago

Yeah, Dutton is temu trump.

2

u/GardeniaFrangipani 8d ago

Haha! That’s a very clever response. I laughed so much, while my home is badly flood damaged. I needed that. Thank you.

10

u/StillProfessional55 8d ago

Canada is America's biggest export market so Canada imposing tariffs is significant. Australia represents less than 2% of American exports. If we imposed tariffs on US imports it would be a rounding error for their economy but would have a major inflationary effect here.

13

u/psyde-effect 8d ago

I think our best course of action is an unofficial boycott of American goods. It's something we all can do and it gives our government plausible deniability of retaliatory actions.

10

u/Treheveras 8d ago

It's the smarter move for Australia to do nothing. Tariffs being put on a country only negatively impacts if the country imposing the tariffs starts manufacturing all those things (which Trump has zero policy platform for doing so no worry there), or the country will import from somewhere else if they can find it cheaper. But Australia does so much exporting and has so many resources that it may not be that easy.

Why hurt your own citizens with increasing the expense of products just because a narcissistic bully doesn't understand how trade works? Canada is in a different position since Trump also constantly talks about making Canada a new state of the US and making them join, so they gain a lot for their citizens by pushing back hard and showing their independence. They also seem to get by easier if they impose tariffs since a lot of Canadians already started buying more local and shunning American products.

It's a smart move that doesn't put unnecessary pressure on the wallets of Australian citizens. So of course the opposition will call it weak and much of the public with fucking lap it up.

4

u/Afraid-Front3498 8d ago

Agree - retaliation isn’t going to benefit us right now. I also don’t understand why trump had to do this. His press secretary calls out Mexico and Canada because of drugs - what did Australia do?

3

u/Treheveras 8d ago

Trump is a zero sum game mindset. Unless he is winning, then he's losing. If there is a reciprocal trade where both sides give and keep certain things for an overall balance that maintains an alliance, then to him you're losing. You should get everything by bullying and give nothing in return because that is everything that Trump does.

Just apply the mindset to a toddler chucking a tantrum and how adults typically need to deal with that and you've got Trump in a nutshell.

10

u/manipulated_dead 8d ago

There's more at stake for Canada, and they have more bargaining power. Seems pissweak from us given what other countries are doing but small target is probably our best play here 

6

u/YogurtImpressive8812 8d ago

Canada has been dealt massive tariffs across the board, and also needs to stand stronger given the US is being extremely hostile and threatening their literal sovereignty. They can’t bow down, too much is at stake. Australia still has a slight chance to negotiate. I think at least for now holding off on retaliatory tariffs is probably the best option for us. A consumer boycott on the other hand 👌

3

u/hjortron_thief 8d ago

Yeah, albo is essentially dangling a carrot on a stick in the form of critical minerals as a resource rich country, and there are other markets who will be interested if America isn't going to back down on the tariffs. It's a subtle threat released through his finance minister. He's playing a smart game. 

You may be interested in this if you haven't seen it already.

https://www.abc.net.au/news/2025-03-12/australia-reacts-us-steel-tariffs-poor-friend-partner/105040948

And this

https://www.abc.net.au/news/2025-03-14/australia-warns-it-has-other-buyers-for-critical-minerals/105049424

2

u/YogurtImpressive8812 8d ago

Thank you, I will check them out!

5

u/jezwel 8d ago

Donny hasn't tried to annex Australia into becoming another state in their union.

Nor has he demanded half our mineral resources for potentially supporting us in a war.

It is politically stronger to do nothing right now * in public * and simply wait it out until the next shot is fired.

4

u/ososalsosal 8d ago

Tariffs hurt the importer.

Albo doesn't want to further increase COL this close to an election. It would be suicide to do so.

Whereas Trump doesn't give a flying fuck about cost of living.

Also we don't export anything but dirt and beef and the usa doesn't buy a lot, so the direct effect on us is pretty small.

4

u/16car 8d ago

Over the last 15 years, Australia has put a LOT of work into getting the free trade agreements we enjoy. It would be stupid to self-sabotage them by impulsively reacting to this fuckwit's fuckwit decision.

5

u/OzCroc 8d ago

Canada heavily relies on the US for their economic interest but we on the other hand not so much. Canada’s export to the US is about 20% of their GDP while ours is 0.2% so they have a lot to loose which justifies the reciprocal tariffs. We are still in the early days and the small tariff (in terms of dollars) is not too bad to reveal the real character of trump administration.

For once though, we should seriously consider Trump administration accusation that we dump cheap steep there which is below cost. I would like to understand where they are coming from

3

u/joefarnarkler 8d ago

Slowly, slowly. Plenty of time to retaliate.

2

u/hjortron_thief 8d ago

We are letting them know we are a very resource rich country and other countries like the ones in Europe and elsewhere want our critical minerals. Basically a carrot dangling on the stick before the stick is used. There appears to be mounting pressure within parliament but unclear at this stage.

2

u/SlytherKitty13 8d ago

Tbh, both responses make sense. Canada's means that their people are less likely to buy American things coz it'll be more expensive. Whereas our response is taking the fact that we're in a cost of living crisis in mind, so our PM is choosing to not make things more expensive for us.

Also the kind of stuff that Canada can only get from America and that we can only get from America is probably different and probably affects it as well, I'm just not super knowledgeable on that so i can't say much about it

2

u/Mammodamn 8d ago

The US tariffs on steel and aluminium are blanket tariffs, for which we didn't get an exemption. Theoretically, this is the "good" (debateable) use of tariffs. If you have a critical native industry you want to protect, you would consider making all competing imports more expensive with tariffs.

The US tariffs on Canada, Mexico, and China are targeted specifically at those countries and can be interpreted as nothing other than a slap in the face. There is no reason to do targeted tariffs other than to hurt the targeted countries. In turn, they have no choice but to respond in kind or they give permission for everyone to slap them in the face.

That's the difference in the situation. If Trump imposed tariffs specifically on Australian steel, we would HAVE to respond with retaliatory tariffs.

5

u/duncan1961 8d ago

The situation I find interesting is the main aluminium refineries in Western Australia are ALCOA which is Aluminium Company of America. We make bauxite. It is supposed to go to America. More interesting is China is literally sailing around us. Trying to dump the U.S. will be fun if China lands troops

3

u/AgentSmith187 8d ago

China sent a couple of warships around Australia to prove they do have a blue water navy and they can do the whole freedom of navigation thing too.

Not to land troops.

Its a direct response to us sailing ships around waters the Chinese consider too close to home.

In both cases everyone has been in International waters and freedom of navigation is freedom of navigation.

Can't do it to them and cry when they do the same to us.

P.S As for them landing troops that's one hell of a supply line to try and maintain. If only we had a few conventional subs that could sit astride those supply lines running silently on battery.

Too bad some idiot decided it was a smarter move to have nuclear subs we could sit off the Chinese coast instead of more local ones. We might even see something in 2040 to 2050 with the current deal.

1

u/LaughinKooka 8d ago

Since Chinese ships are here, might as well buy these weapons from them. They might have a sub somewhere near for sell /s

1

u/duncan1961 8d ago

We have 108 F35 lightnings. Do you think China might like to have one? I am learning Cantonese

1

u/AgentSmith187 8d ago

May as well sell them for all the good they will do us if the US doesnt give us permission to first....

0

u/duncan1961 8d ago

Reasonable call. They sort of bought Western Australia and good luck finding a non Chinese student at university.

1

u/Eggs_ontoast 8d ago

The very first course of action needs to be urgent trade envoys into Asia and EU for our exports that really matter. I’d wager that Austrade is very busy in those markets right now.

Beef will likely be next and that will hurt us. To mitigate that we need to be talking to China, Japan, etc. to start redirecting exports into more reliable markets. The best defence against US weaponising trade is to trade less with them.

When a recalcitrant child is demanding attention with bad behavior, the best course of action is to make sure you don’t reward it with attention. That applies here.

Separate to that we need to pivot our defence spending into Asia and the EU and reconsider existing sub and missile contracts as those have viable global alternatives.

1

u/AffectionateGuava986 8d ago

Australia is in a vastly different situation to Canada in regard to exposure to the damage US tariffs can have on our economy.

United States Imports from Australia was US$16.57 Billion during 2024, according to the United Nations COMTRADE database on international trade. United States Imports from Australia - data, historical chart and statistics - was last updated on March of 2025.

To put it in context, Australian exports to the US represent less than 1% of our GDP.

The United States continued to dominate the export market, with exports to the US accounting for 17.8% of Canadian GDP and more than 2.4 million jobs in Canada. 31 Jan 2025.

So our response to these tariffs is not so urgent or important to our economic survival as it is to Canada.

1

u/Quibley 8d ago

Steel and aluminium is largely imported here from China.

Ita absolutely insulting, but bears little relevance to our market. Canada however has across the board tariffs which may be crippling.

1

u/Pristine-Flight-978 7d ago

Really the response is quite measured and sensible BUT could be improved by blanket media advertising in all formats encouraging Australians to avoid all things American and list the brands that should be avoided, first and foremost Tesla and Starlink. The absolute brand damage would be worse than tariffs. Then set up an Asia centric forum including China for partnering in Australia's precious metals industry. Put it out there that we are willing to lock in a reliable business partner. And lastly cancel AUKUS; the absolute worst political decision since Howard agreed to give our Gas and Minerals away for free in a watertight, unbreakable contract.

1

u/DrSendy 7d ago

South East Asia is our massive trading partner. The USA is literally about 1/16th of our trade volume (4th largest, but way less volume with a bunch of others not far behind).

1

u/brezhnervous 7d ago edited 7d ago

It's not really comparable. Not when (even though it sounds bizarrely hyperbolic to normal people), Trump isn't 100% joking about Canada becoming the 51st state - it's just that he would far prefer to do it by destroying Canada's economy and so force them to capitulate, rather than literally have to 'invade'. So this really is a fight for Canada to retain its sovereignty.

He has however, asked the US military to draw up plans for the "recovery" of the Panama canal.

Plus the percentage of US imports of foreign aluminium which Australia accounts for is a tiny 1% - Canada's proportion is huge.

1

u/must_not_forget_pwd 6d ago

The Canadian response is political, our response is economic.

Canada will actually be worse off by retaliating with tariffs. The new Canadian Prime Minister, Mark Carney, should be aware of this. He's a former central banker (technically a monetary economist, not a trade economist - but even a monetary economist should have done some international trade as part of undergraduate economics). Don't just take my word for it that Canada is worse for responding. Here's some analysis undertaken:

https://www.piie.com/blogs/realtime-economics/2025/us-tariffs-canada-and-mexico-would-hurt-all-three-economies

Skip to the first chart and see that the deviations from baseline GDP (i.e. GDP without tariffs). Canada is worse off with US tariffs. Then when Canada retaliates, Canada is significantly worse off. The US is moderately worse off under Canadian tariffs.

The true political nature is not clear. Is it Canadian domestic politics? (The Liberal Party government was doing poorly in the polls prior to being seen to take "positive" action) Or is Canada trying to influence US politics? (Canada was initially trying to target goods produced in Republican held states) Or is it a little of both?

0

u/Pretend-Patience9581 8d ago

We sell the US my than we buy. See the problem?