Here’s a suggestion for what may well be months of debate over the impact of Donald Trump’s planned tariffs on the rest of the world including Australia; debate the treasurer is formally kicking off today. Let’s more accurately describe tariffs as consumption taxes on imports. That way, even if Trump remains delusional about what tariffs actually are, Australian voters will have no excuse.
Jim Chalmers says the direct impacts on Australia of tariffs are unlikely to be too big, given a floating exchange rate, but the bigger threat will come from the eruption of a trade war. As it stands, Trump plans to impose punitive tariffs on our biggest trading partner, China, and promises to make our third-largest trading partner, the European Union, “pay a big price”. Both are almost certain to retaliate with their own sanctions on US products. How Trump reacts to that retaliation, and what he does when — as happened last time he imposed tariffs — the US trade deficit worsens, rather than shrinks, could determine whether we have a full-blown trade war that harms economies everywhere.
Australians, too, want retaliatory tariffs in response to any Trump tariffs on Australian exports: 46% of respondents to a poll this week want sanctions applied to US exports, with just 13% opposed. Or, to put it another way, just 13% of respondents understand the most basic aspects of economics and trade.
Perhaps it’s because 46% of voters are confused by the relatively innocuous term “tariff”, and don’t understand that it means “tax”. A consumption tax, on imports, which increase prices, unless the importer and/or the retailer selling the imports opts to pay the tariff themselves, the odds of which are vanishingly small. So, 46% of voters want to increase prices, despite apparently being worried about the cost of living, just because Donald Trump wants Americans to pay higher prices. It’s like a competition to see who can punch themselves in the face harder.
And we have enough of this stupidity already. Australia has an Anti-Dumping Commission (ADC), which is a body whose sole purpose is to increase the prices of goods bought by Australian consumers and businesses. Inflation is the entire point of the ADC: it imposes tariffs on goods that it believes are being sold below market price in Australia. In other words, because Australians are benefiting from the dumb trade policies of other countries — like subsidising exports — they must be punished with higher prices.
Take tinned tomatoes, a staple for most households: local grocery oligopolist SPC complained to the ADC that Italian tomatoes sold by Coles and Woolworths are being “dumped”, so the commission dutifully opened up an investigation. SPC has been whingeing about Italian tomatoes for a decade, but the most recent complaint is timed along with SPC’s return to the sharemarket. As has happened previously with SPC’s complaints, the ADC will likely conclude that Italian tomatoes are indeed being dumped and impose a tariff on them — increasing prices for households and reducing competition for SPC.
At a time when Australians are up in arms about the cost of living and supermarket price gouging, this “investigation” should have been howled down, and the ADC’s bureaucrats told to go find something less harmful to do. Italian tomatoes are cheaper than Australian tomatoes, and they taste better. If they’re being imported here at less than cost price, all the better for Aussie households — it’s a rare win when supermarkets are normally fleecing them.
Instead, we’re dumb enough to have an entire bureaucratic apparatus dedicated to punishing households for getting some discounted groceries. No wonder nearly half of us are stupid enough to think making ourselves pay more for American goods is a smart response to Trump’s idiocy.
By the way, have a look at the ADC’s other “investigations“: they’re all building materials. As a time when surging construction costs have immensely complicated plans to build more housing, and caused significant cost blowouts on infrastructure projects, we have a government agency trying its best to increase costs still further.
More taxes and higher costs. Hiding under that innocuous word “tariffs”.
Should Australia impose retaliatory tariffs on the US? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
