Billions wiped off ASX as Trump announces 25% tariff on aluminium, steel

Australian Prime Minister Anthony Albanese has scheduled a call with U.S. President Donald Trump to advocate for Australia’s exemption from the newly imposed 25 per cent tariffs on steel and aluminium.

The announcement of these tariffs triggered a sharp market reaction, wiping *$15 billion off the ASX. The benchmark ASX200 dropped 0.5 per cent within the first hour of trading.

During Question Time on January 10, 2025, Prime Minister Albanese confirmed the planned conversation with President Trump, emphasising that discussions on the matter would be conducted through diplomatic channels.

The Prime Minister said, "Australian companies have significant investments in the US steel industry, creating thousands of jobs in both the US and Australia."

"We will continue to make the case for Australia's national interest with the US administration and, what's more, we regard this as also being in the US national interest as well, because tariffs, of course, don't tax us, they tax the purchasers of our products."

"And that is something that is very clear, and it's also a fact that the US has had a trade surplus with Australia since the Truman presidency."

According to the UN's COMTRADE database, in 2024, the U.S. imported approximately $638 million worth of Australian steel. This move could significantly impact major ASX-listed companies like Rio Tinto, which may be subject to the new duties.

President Trump announced that the fresh trade tariffs would be officially declared on Monday (U.S. time) and apply universally, indicating that Australia is unlikely to receive an exemption.

The US President told a reporter, “Steel. Any steel coming into the United States is going to have a 25 per cent tariff. Aluminium would be slapped with a 25 per cent tariff."

A tariff is a tax on imports, meaning Australian steel and aluminium exports to the U.S. will become more costly for buyers, potentially reducing demand. High tariffs can severely restrict exports, and if these duties are imposed, they could significantly impact the Australian industry.

Responding to Monday's announcement, the Australian Minister of Trade, Don Farrell, emphasised that the government has consistently advocated for free and fair trade in discussions with its American counterparts.

Farell said, “We have consistently made the case for free and fair trade, including access into the US market for Australian steel and aluminium.”

“Our bilateral economic relationship is mutually beneficial – Australian steel and aluminium is creating thousands of good-paying American jobs, and are key for our shared defence interests too.”

Australia successfully avoided US aluminium tariffs during the first Trump administration. In 2017, President Trump threatened to impose tariffs, but after months of strategic advocacy by former Prime Minister Malcolm Turnbull and then-US Ambassador Joe Hockey, Australia secured an exemption in 2018. President Trump ultimately directed his trade measures toward China instead.

The US remains Australia’s third-largest aluminium export market, following South Korea and Japan.

On March 20, 2022, Australia banned the export of alumina and aluminium ores to Russia in an effort to restrict Russia's aluminium production capacity.

Explore the latest aluminium industry outlook 2025 for comprehensive insights into Australia's aluminium production and export trends and an in-depth analysis of the United States' aluminium import, production, and sector-wise consumption. This report provides a detailed perspective on market dynamics, trade flows, and emerging developments shaping the global aluminium landscape.

*Several publications

Image credit: 9news