A few weeks ago, you'd probably never heard of the word "tariff,". You might've even assumed it was an obscure music genre or a trendy new fitness class (dw, we’re not judging!). 

But now, the word ‘tariff’ is suddenly everywhere—splashed across your newsfeed, headlining podcasts, and dominating dinner-table debates. A bit like how everyone seemed obsessed with pickleball or sea moss smoothies overnight.

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Tariffs have jumped from boring economics textbooks to mainstream chatter. So what exactly is a tariff and why should you care? 🤨 

Well we’re here to give you the 101 on the latest tariff tea ✨

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What’s a tariff?

A tariff is a tax charged by a government on goods imported from other countries. Tariffs are often enforced to protect local businesses. By making foreign products more expensive, it means they become less competitive than local goods, it’s also a sure-fire way to raise tax revenue.

On the 3rd of April, aka ‘Liberation Day’ according to Trump, the US government revealed a bunch of tariffs to ALL their trade partners, with “no exceptions”. 

Here are the new tariffs Australia have copped from the 5th of April:

⛏️ 25% tax on steel & aluminum imports 

Albo, Australia’s prime minister, tried to get us a tariff exemption but Trump’s team said “no exceptions or exclusions, including Australia”. So now all our steel and aluminum exports to the US will be slapped with an extra 25% tax. 

🥩 10% tax on beef imports

You could say Trump had some BEEF with Australia because the US is Australia’s largest beef importer. Trump is beefy because Australia banned the importation of US beef 20 years ago due to risks of ‘mad cow disease’. 

💰 10% tax on all other imported goods (aka the ‘reciprocal tariff’) 

No one really knows the details of how Trump’s team came up with 10% for Australia, but it was the minimum tariff imposed by Trump’s team on the so-called ‘Liberation Day’. 

Australia and the US have a free trade agreement (AUSFTA) which is meant to eliminate or greatly reduce barriers to trade (like tariffs), so this move by the US could be seen as a potential violation of the agreement which may be disputed. 

🐧 Even penguins can’t escape tariffs

Heard Island and McDonald Islands are two islands near Antarctica (part of Australian territory) which have also been slapped with US tariffs. However, these islands are solely inhabited by penguins, with no human contact for over 20 years. The penguins have yet to release a statement…

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Who pays this tax? 

Tariffs are paid by the company who is importing the goods. So with all these tariffs, American businesses will be responsible for paying this new tax on all goods imported from foreign countries. But in order to sustain profit margins, businesses will either import fewer foreign products, OR push up the price of their own goods (which means passing on this tax to consumers in America). Yikes!

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And how will this impact me, you and everyone else who likes buying sweet treats? 

With the US being such a key player in the global economy, any big moves will inevitably impact the rest of the world. Already, the stock market is freaking out. 

The share market can be quite sensitive to financial instability because it often reflects investor confidence levels - and right now, everyone is bracing for impact. The ASX is at a 7 month low, and the S&P500 (top US companies) index is chaotic. But one thing’s for sure, if you’re an investor there’ll be some turbulent times ahead - so strap in!

Besides this, the actual effect of US tariffs on Australia’s economy is still TBC because the direct impact to our steel and aluminum exports is limited. America only makes up about 10% of our steel and aluminum exports, which overall, only makes up about 0.2% of Australia’s overall exports. 

The beef industry will be hit a little harder since beef accounted for ~15% of Australia’s goods exported to the US last financial year (they’re our biggest beef consumers). So if you know any agricultural farmers, maybe now’s a good time to check in with them ❤️

The more concerning impact to Australia’s economy will be from the flow on effects of US trade wars with other countries, in particular, China, who is Australia’s largest trade partner. Depending on the global fall out caused by US tariffs, this could significantly affect Australia’s exports with other countries, our supply chain, and foreign currency exchange... But only time can tell the full impact of Trump’s recent tariffs.