US Imposes 10% Tariff on Most Australian Exports with Higher Rates for Strategic Sectors
Amid sweeping US Tariff Changes in 2025, Australian exporters face a new 10% baseline duty on a wide range of goods—alongside elevated rates for steel, aluminium, and automotive products. These changes signal a major policy shift, overriding AUSFTA preferences and reshaping bilateral trade dynamics.
Insights, analysis & key takeaways.
Introduction
On 2 April 2025 (EDT), US President Donald Trump announced a broad trade policy under the “Reciprocal Tariffs” framework, imposing a 10% baseline tariff on most imported goods, including those from Australia, effective 5 April 2025.
This policy represents a major shift in the treatment of Australian exports, which have traditionally benefited from preferential access under the Australia-United States Free Trade Agreement (AUSFTA). While some strategic sectors such as aluminium, steel, and automotive products continue to attract higher 25% tariffs under Section 232 of the Trade Expansion Act, the 10% baseline tariff will now apply broadly to other Australian-origin goods, including beef and agrifood products, consumer goods, and industrial exports.
The new tariffs are legally borne by US importers, but the commercial impact will cascade through pricing structures and supply chain dynamics, directly affecting Australian exporters.
In this Andersen Briefing Note, we set out below a summary of the key changes, a tariff rate cheat sheet for key Australian exports, the legal background to the changes, implications for Australian exporters, our commentary, and some possible impact assessment areas for business to consider.
Key Changes Announced by the United States
- A 10% baseline tariff now applies to most imported goods into the US, including Australian exports, from 5 April 2025 (EDT).
- Additional product-specific tariffs will be applied to selected countries from 9 April 2025, but Australia is not currently included in this tranche.
- Certain goods are exempt from the 10% tariff where they are already subject to higher national security tariffs under Section 232 of the Trade Expansion Act 1962.
- The US-Australia FTA tariff preferences have been overridden under this national interest policy direction.
Cheat Sheet: Current Tariffs on Key Australian Exports to the US
| Product | Tariff Before 5 April 2025 | Tariff From 5 April 2025 | Tariff Basis |
| Most goods | 0% under AUSFTA | 10% tariff | Reciprocal Tariff (baseline) |
| Beef (within AUSFTA quota) | 0% under AUSFTA quota (~418,000t) | 10% tariff | Reciprocal Tariff (baseline) |
| Beef (over quota) | 20% MFN (rarely exceeded) | 10% tariff (if in quota) | Superseded by baseline tariff |
| Aluminium | 25% tariff (Section 232)1 | 25% tariff (unchanged) | Section 232 – National security |
| Steel | 25% tariff (Section 232)2 | 25% tariff (unchanged) | Section 232 – National security |
| Automobiles | 0–2.5% MFN | 25% tariff from 3 April 2025 | Section 232 – National security |
| Auto parts | 0–2.5% MFN | 25% tariff from 3 May 2025 | Section 232 – National security |
| Semiconductors, pharma, etc. | 0% or duty-free | Exempt or under investigation | Future Section 232 (pending action) |
The United States does not operate a VAT or GST system. US import tariffs (including the 10% reciprocal tariff and 25% Section 232 tariffs) are not creditable or refundable. These represent a real cost to US importers, and may be treated as part of the cost of goods sold or reflected in resale pricing. Australian exporters should anticipate flow-on effects through pricing negotiations or commercial terms.
Legal Basis for Tariff Changes – Section 232 of the Trade Expansion Act of 1962
Section 232 (19 U.S.C. §1862) authorises the US President to impose trade restrictions if imports are determined to threaten national security. A Section 232 investigation is conducted by the US Department of Commerce and can result in tariffs, quotas, or other restrictions, without reference to existing free trade agreements or WTO obligations.
This is the legal basis for the current 25% tariffs on steel, aluminium, and automotive goods, which are considered essential to US industrial and defence supply chains. Goods already covered by Section 232 are excluded from the new 10% reciprocal tariff, but the 25% rate remains in place.
Implications for Australian Exporters
1. Erosion of Preferential Access Under AUSFTA
The reciprocal tariff regime represents a de facto suspension of AUSFTA tariff benefits. Australian exporters can no longer assume tariff-free access for most goods and must adjust commercial expectations accordingly.
2. Cost Pass-Through and Commercial Renegotiation
While the tariff is payable by the US importer, the economic burden is likely to shift upstream, particularly in competitive markets or under fixed-price contracts. This may lead to margin compression, volume reductions, or contract renegotiations.
3. Sectoral Impact Varies Significantly
- Beef and agrifood exporters face a new cost impost that may affect price competitiveness, particularly against lower-cost suppliers in Latin America.
- Aluminium and steel producers remain subject to the 25% Section 232 tariff but are not exposed to further increases under the new baseline regime.
- Consumer goods, industrial inputs, and manufactured components previously covered by AUSFTA will now face standard 10% duties unless exempted.
4. Supply Chain Vulnerabilities
Exporters reliant on just-in-time logistics or integrated fulfilment models in the US may experience disruption, particularly where cost or delivery timing is critical. Firms should reassess incoterms, distribution arrangements, and supply chain dependencies.
5. Customs and Classification Compliance
Precise product classification (HTSUS codes) and origin certification will be essential. Misclassification could result in misapplied tariffs, penalties, or customs delays. Exporters should consider obtaining binding classification rulings in complex cases, say for example, mixtures or composite goods.
Andersen Comment
The introduction of reciprocal tariffs by the United States represents a significant policy shift, with implications that extend beyond short-term trade tensions. The new framework reduces the practical value of long-standing bilateral agreements, including the AUSFTA, by applying tariffs based on domestic strategic and economic priorities, rather than treaty commitments.
While Australia is not currently subject to the higher, country-specific rates reserved for other trading partners, the imposition of the 10% baseline tariff is a clear signal that US trade policy is becoming increasingly unilateral and transactional in nature.
This development reinforces the need for Australian businesses to adopt more resilient and flexible trade models that account for policy uncertainty, re-evaluate assumptions about market access, and actively monitor for further changes, particularly those arising under national security provisions such as Section 232. For Australian businesses, this represents a strategic inflection point. Exporters must now plan for a baseline tariff cost into the US and prepare for further differentiation of trade treatment across sectors and partners.
The long-standing AUSFTA is no longer a reliable shield against tariff risk. Businesses must adapt their US strategy accordingly, including pricing models, transfer pricing documentation, supply chain design, and risk mitigation plans.
Possible Actions to Assess Impacts
| Action | Purpose |
| Map current exports to US tariff codes | Identify which products are affected by the 10% tariff or existing 25% rates |
| Quantify exposure | Model profit impact under different sales volumes, pricing, and cost recovery |
| Review contracts and incoterms | Ensure tariff risk and cost-sharing are properly addressed |
| Reassess transfer pricing | Ensure consistency with new cost structures and customs valuation principles |
| Monitor future Section 232 actions | Prepare for potential inclusion of other sectors (e.g. energy, technology) |
| Engage with US customs specialists | Explore classification rulings, exemptions, or structuring support |
How Andersen Can Help
Andersen’s International Tax & Transfer Pricing team, in coordination with our Andersen US and global colleagues, can support clients with:
- Product-level tariff mapping and impact modelling
- Transfer pricing updates and customs valuation advice
- Strategic supply chain and fulfilment structuring
- Legal and commercial review of cross-border agreements
- Engagement with US customs authorities for ruling or clarification
- Policy monitoring and scenario planning
