Australia will consider taking its ally America to the World Trade Organization (WTO) if it is targeted in the Trump administration’s “liberation day” tariff regime, to be imposed from Thursday.
The US president was expected to announce a new round of global reciprocal tariffs at 4pm on Wednesday Washington DC time (7am Thursday AEDT), but which countries and goods will be targeted remain largely unknown.
Australian pharmaceuticals, meat exports and other agricultural products are potential targets, but some in government anticipate tariffs of up to 20% across all exports to the US.
Senior government sources said they were pessimistic Australia could escape Trump’s broad-brush tariff regime.
Asked directly whether his government was preparing to take the US to the WTO – the arbiter of international trade disputes – the prime minister, Anthony Albanese, said his government was “prepared for all possibilities going forward”.
A WTO case would take years to prosecute, and would be seen as an affront to a close ally. The US might ignore Australia’s claim or any findings made against it, or even withdraw from the WTO altogether.
Ahead of the announcement, Albanese on Wednesday night dined with golfing legend Greg Norman, who has a close relationship with Trump and has acted as a go-between for Australia and the US president in the past.
Government sources believed the broad-brush tariffs contemplated by the Trump administration would be a clear breach of the 2005 free trade agreement signed between the US and Australia.
Canada has already taken the US to the WTO over the steel and aluminium tariffs Trump imposed last month.
Australian National University honorary professor Jenny Gordon, a non-resident fellow at the Lowy Institute, said the WTO mechanisms were slow and ponderous.
“Anti-dumping cases can go for years, and tariffs can start straight away. But the WTO still provides a mechanism to come together and take common cause.”
Gordon told Guardian Australia a collective action by countries against the US tariff regime would be the most effective countermeasure.
“We need Australia to stand up and work with Japan, work with Korea, and even work with China. It’s the perfect time. That’s our best strategy, but it will take time and effort.”
She said tariffs imposed by the US could lead to a rise in dumping of surplus stock previously bound for the American market.
“If we can get some agreement by countries not to ‘dump’ excess goods in other markets and by governments to resist requests for antidumping tariffs, that will be hugely powerful. The WTO could provide a forum for this type of cooperation, which would help prevent the growth of a global trade war.”
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Albanese re-emphasised that the proposed US tariff regime would hurt the US economy and US citizens.
“Tariffs are an act of economic self harm on those who impose it. It increases the costs for buyers in the United States of America,” he said.
The prime minister said the US represented less than 5% of Australia’s exports, and exporters would continue to diversify into new markets if American tariff barriers were imposed.
Inside government, there is resignation Australia will not escape new tariffs despite its close relationship with the US.
In Trump’s first administration, Australia secured exemptions from tariffs after arguing that Australia ran a trade deficit with America, had a signed and ratified free trade agreement, and was a committed ally and security partner.
But Trump’s second administration has repeatedly said the president regretted the exemptions he gave Australia in his first term, particularly because they set a precedent for other countries to claim similar carve-outs.
On Tuesday, the trade minister, Don Farrell, held a virtual hook-up with 100 industry stakeholders to brief them about the prospect of US tariffs and how the government was planning to respond.
Senior sources said the government would not panic if Trump included Australia in tomorrow’s “liberation day” announcement.
The White House press secretary, Karoline Leavitt, told a briefing in Washington the tariffs would go into effect as soon as they were announced.
But Leavitt indicated Trump would be willing to consider amendments after they had been imposed. Trump has already sought to use tariffs as leverage to pursue foreign policy goals – such as stemming the flow of illegal fentanyl across US borders from Canada and Mexico – delaying or withdrawing them when other countries acceded to his wishes.
“Certainly, the president is always up to take a phone call, always up for a good negotiation,” Leavitt said. “But he is very much focused on fixing the wrongs of the past and showing that American workers have a fair shake.”
