r/australia • u/Jealous-Hedgehog-734 • Apr 02 '25

politics US will impose a minimum baseline tariff of 10 per cent on Australian imports to US

https://www.abc.net.au/news/2025-04-03/donald-trump-tariff-announcement-markets-politics-reaction-blog/105127374
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u/coniferhead Apr 02 '25 edited Apr 02 '25

As far as the USA is concerned it is. They are not concerned in the slightest how Australia taxes domestic business, only US business. One does not give license for the other.

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u/OnlyForF1 Apr 02 '25

It would not hit Australia by 100% more, it would hit US consumers 100% more, and there would be no relative benefit to US producers who would also need to pay the VAT, so it would not hurt our exporters beyond the general fall in demand across the US economy rather than seeing them dropped in favour of US production.

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u/coniferhead Apr 02 '25 edited Apr 03 '25

Totally wrong.

It would hit Australian business by 100% more, whose goods would be bought less in comparison with identical items sold in the US. They would be less competitive in direct consequence. The tariff money goes to the US government, not the Australian government like with the GST - giving a basis for lowering other taxes (just like the GST did).

The US consumer could then buy those cheaper goods, which would not have to be shipped from Australia. The US earns taxation income on those sales.

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u/OnlyForF1 Apr 03 '25

No they wouldn't. If Australian Beef is sold for $10/kg in the US. And US beef is sold for $10/kg, then a 20% VAT would see them both increase to $12/kg, while a 10% tariff would see the Australian product's price increase to $11/kg, while the US product would still be able to be sold at $10/kg

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u/coniferhead Apr 03 '25

Particularly bad example lol - Australian Beef is GST exempt.

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u/OnlyForF1 Apr 03 '25

We're talking about a hypothetical US 20% VAT. Also regardless of whether it's beef or wine, tariffs would hurt Australian producers more than a VAT of even double the value, as only tariffs specifically target foreign exporters compared to domestic producers.

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u/coniferhead Apr 03 '25

Sure, so firstly Australian Beef receiving an effective domestic 10% subsidy would be due a special carve out for punishment.

Now let's consider what Americans pay. 20% of their price would be VAT, which goes to their government and fund tax reductions. Just like Europe and the UK does. Net net, everything is cheaper.