US tariff proposal deals Australia multi-billion-dollar blow

Australia faces an economic blow under a newly proposed 12.5% US import tariff, with fresh modelling warning the measure could slash $1.6 billion annually from local exporters and strip away the nation's hard-won competitive edge.

The Trump administration unveiled the sweeping penalties following a United States Trade Representative investigation into forced labour.

Critics argue the probe was a political manoeuvre designed to resurrect broad protectionist policies after the US Supreme Court recently struck down the president's controversial "liberation day" tariffs.

While Australia faces the harsher 12.5% penalty, key trading rivals—including Canada, Mexico, Indonesia, and the European Union—secured a lower 10% rate after proving they possess superior frameworks to block illicit goods.

Compounding the pain, the White House is introducing aggressive customs bureaucracy that Branson warns establishes a biassed, "two-track trading system" favouring US-headquartered firms over foreign subsidiaries.

With the interim 10% levy expiring in July, economists expect further targeted investigations aimed at driving baseline US tariffs even higher.