12 March 2025

Despite a month of discussions and negotiations, at midnight on 12 March (3pm in Canberra), President Trump’s 25% tariffs on all steel and aluminium imported into the United States took effect. Tariffs are not new to Trump and he imposed steel and aluminium tariffs in 2018. But there were a few key differences this time around.

In 2018, the aluminium tariffs were only 10%, but they have now been elevated to 25%. Importantly for Australia, his new order ended all country exclusions on these tariffs. Australia, Canada and Mexico were the only countries exempted from the tariffs in 2018, but some countries later negotiated alternative arrangements such as import quotas. While the 2018 tariffs never officially ended, the Biden administration expanded exemptions to the EU, Ukraine and multiple other countries.

While Australians hoped they might negotiate an exemption based on the United States having a bilateral trade surplus and Australia’s significant investments under AUKUS, the wording of the presidential proclamation on 10 February about countries with exemptions (explicitly naming Australia) made this sound unlikely:

In my judgment, the arrangements with these countries have failed to provide effective, long-term alternative means to address these countries’ contribution to the threatened impairment to the national security by restraining steel articles exports to the United States from each of them, limiting transshipment and surges and distorted pricing, and discouraging excess steel capacity and excess steel production. Thus, I have determined that steel articles imports from these countries threaten to impair the national security, and I have decided that it is necessary to terminate these arrangements as of March 12, 2025.

Whether a future exemption can be negotiated remains to be seen, but as USSC Non-Resident Senior Fellow Lester Munson points out, ‘deal power’ is a critical vector for US influence internationally now and allies and partners should bear this in mind.

Mari Koeck
Director, Engagement and Impact

"Our country had to do this. We had to go and do this. They've taken away, other countries have taken away our business, they've taken away our jobs."

President Trump speaking to reporters | 11 March 2025

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By the numbers

Military spending as percentage of GDP
2014-2023

Source: SIPRI Military Expenditure Database

President Trump has been calling on US allies and partners to spend more on defence. In January he said NATO allies should lift their target defence spending from 2% to 5% of GDP. Allies around the world are trying to be on the front foot with many sharing their plans to increase spending. Ahead of his meeting with President Trump in the Oval Office, UK Prime Minister Keir Starmer announced a 0.2% of GDP increase in military spending by 2027 with plans to hit 3% by the mid-2030s. Australia has also projected an increase from 1.9% to 2.3% of GDP in defence spending by the mid-2030s.

While relatively stable over the last 10 years across many US allies and partners, there was an upward trend in defence spending from 2021 to 2023. US defence spending declined as a percentage of GDP from the Obama administration to the first Trump administration until 2020 when it climbed back up to 3.65%. Even then, the United States has not spent 5% of GDP on military expenses since 1990, at the end of the Cold War.