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The relief of 10% tariffs
16 April 2025
Entering 2025, it was hard to imagine anyone breathing a sigh of relief over a 10% tariff applied to most goods entering the United States. But that is just what President Trump’s most recent reversal achieved. Last week, President Trump announced a 90-day pause on most of the 2 April tariffs. However, rather than no tariffs for 90 days, he lowered the level to a 10% baseline for most countries globally.
Stock markets rose sharply with the announcement and bond markets started returning to their previous level, but a 10% tariff on goods imported to the United States and an escalating trade war with China could both have seismic impacts on the global economy.
This was the first major showdown between Commerce Secretary Lutnick and Treasury Secretary Bessent. It looks like Bessent's push for negotiations, rather than tariffs, won the day. However, in spite of Bessent's claim that this was Trump’s “strategy all along,” Trump himself said he reversed course due to the market reaction.
Mari Koeck
Director, Engagement and Impact
"You are going into that room. You are not going to come out until you have got a `yes' from the meeting. I don't care if you've got blood all over you you will not come out of there until you get that agreement."
Former US Deputy Secretary of State Richard Armitage in negotiations for the Australia-US Free Trade Agreement | 2001
CEO message on Richard Armitage
Vale Richard Armitage
This week America’s allies in Asia lost one of the best friends they ever had. From single-handedly evacuating the entire South Vietnamese Navy as Saigon fell in 1975 to standing by Shinzo Abe as he transformed Japan’s global security role four decades later — Rich Armitage left an indelible mark on the geopolitics of Asia. He was a mentor and hero to many of us on both sides of the Pacific and both sides of politics.
Nothing could match travelling to Asia with Rich—the beers and war stories upon arrival and the mandatory 0600 gym workout the next morning when he often had to ask the hotel staff to bring extra weights for his bench presses. He was capable of incredible toughness, humour, and compassion. When he was Deputy Secretary of State, Japan’s Asahi Shimbun printed a cartoon that argued no country would dare attack Japan if the government just built statues of Rich Armitage along the coastline.
Every one of his friends in Australia will have a “Rich” story…salty for sure and often about how he helped them out of a tough patch in Washington or gave them unvarnished advice on a hard policy question at home. Alliances depend on trust and Rich built it from the ground up. Others will too…but not like he did.
Dr Michael Green
Chief Executive Officer
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Our experts in the news
Washington Post | Trump ties become liability for Australia’s conservative party leader
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Australian Financial Review | Australia caught in crossfire as China, US seek allies for trade war
The Australian Financial Review reports that an elusive free trade deal with the European Union is regaining momentum as the Albanese government and other nations seek to buttress their economies from the escalating trade war between the United States and China in which they are being asked to pick a side. The article quotes USSC director of economic security Hayley Channer.
Reuters | AUKUS nuclear submarine sale under scrutiny as Trump tariffs rattle Australia
Prof. Peter Dean spoke with Reuters about the different ways the United States and Australia might use submarines in the Indo-Pacific region, saying, "If it's a Taiwan contingency, the U.S. will be concentrating its forces in the east and South China Sea around Taiwan. Australia may not be directly involved."
By the numbers
Countries with the largest trade deficits with the United States
Top five countries that import more from the United States than they export
As President Trump embarked on his mission to declare “economic independence” for the United States through his Liberation Day tariffs, even trading partners with whom the United States enjoys a trade surplus were targeted. The Netherlands and Belgium, as European Union member countries, were subject to a 20% tariff. Australia and the United Arab Emirates both received the minimum tariff level of 10%.
The US Trade Representative formula for calculating the so-called “reciprocal tariffs” was based on dividing the trade balance the United States has with a country by the total goods imports and then dividing by two. But this number was based on trade balances rather than actual tariffs and countries who import more from the United States than they export to it were still hit with the base rate for tariffs.
While the 90-day pause on tariffs is in effect, countries around the world are working with the White House to try and hammer out a deal. In the case of Australia, their trade deficit with the United States, AUKUS investments and pledges to increase defence spending make a strong case to be a favoured partner.
Expect to hear more about Australia’s critical minerals in the coming weeks as diplomats work to sweeten a deal with the United States. Australia currently has 26 minerals identified on the US 2022 Final List of Critical Minerals and Australian Government officials have indicated that they are working on a plan for strategic use of these minerals in response to the off-and-on-again tariffs.
Upcoming events
INFORMATION SESSION
Visiting fellowships for the JADE program—Japan-Australia Dialogue and Exchange for the Next Generation
Join this information session to learn more about applying for the Japan-Australia Dialogue and Exchange for the Next Generation (JADE) program—designed to help cultivate a new generation of Japan-Australia strategic experts.
24 April 2025
4:00-5:00pm AESTZoom
PUBLIC FORUM
Global economy in turmoil: Can Australia and Japan shape the new economic world order?
A panel of leading experts will explore how Australia and Japan can navigate and shape the evolving global economic order.
7 May 2025
6:00-7:00pm AESTUSSC Boardroom, Institute Building, City Road, University of Sydney
WEBINAR
Space traffic jam: Challenges facing space sustainability
Audrey M. Schaffer joins Dr Kathryn Robison to discuss how space sustainability can be integrated into the national security policy debate.
14 May 2025
9:00-10:00am AESTZoom
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United States Studies Centre
Institute Building (H03)
University of Sydney NSW 2006