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Buying exemptions: Donald Trump's tariff deal

  • 13 March 2018


The announcement by Donald Trump that he would make good his promise to take protectionist measures to bring back flagging industries has sent shudders through the free trade lobbies of the world.

Utilising the 1962 Trade Expansion Act, Trump announced a 25 per cent tariff on steel imports, and a ten per cent rate on aluminium, due to come into effect next week. 'If you don't want to pay tax,' extolled Trump, 'bring your plant to the USA. There's no tax.'

White House trade advisor and populist Peter Navarro had taken a fairly absolute line, one always dangerous in Trumpland, by insisting that tariff exemptions were out of the question. 'As soon as he starts exempting countries,' explained Navarro to Fox News, 'he has to raise the tariff on everything else.' Just to show that he is attuned to the habituated schizophrenia of the current administration, Navarro told CNN in a separate interview that exemptions were possible, provided they served US interests.

Both Canada and Mexico were the first anointed powers to be spared, though this would come at the cost of renegotiating the North American Free Trade Agreement. There was, claimed Trump, 'great flexibility and cooperation to those who are really friends of ours', though it was a heavily costed flexibility. To date, both Canada and Mexico are resisting linking such dispensations with the Trump administration's renegotiating strategy.

Australia has been similarly spared — at some troublingly nebulous price. Malcolm Turnbull duly boasted that Trump 'would not have to impose tariffs on Australian steel and aluminium'. The battling prime minister had been 'relentless in fighting for Australian jobs and Australian exports and that's what I've done'.

On Saturday, Trump tweeted about developments with Turnbull over his commitment 'to having a very fair and reciprocal military and trade relationship'. But something was brewing. 'Working very quickly', stressed a suggestive Trump, 'on a security agreement so we don't have to impose steel and aluminium tariffs on our ally, the great nation of Australia!'

What, tittered the Canberra press gallery, did these words mean? In February, Trump had pressed Turnbull to deploy Australian forces in freedom of navigation exercises in the South China Sea. The feeling was palpable; that Australia was, as its political representatives have done for repeatedly shallow and untutored reasons, readying for another military plunge.


"The gross inequality between the powers has been neatly clothed in the language of accommodation and common ties."


Foreign Minister Julie Bishop insisted