US President Donald Trump’s proposed tariffs will hit some countries and companies more than others. Here’s a look at how it may affect your business.

There’s no room to be complacent about United States President Donald Trump’s planned tariffs, given that we operate in an economy heavily dependent on trade.

That’s the warning from Innes Willox, CEO of the national employer association, the Australian Industry Group.

“A sudden or gradual retreat to protectionism on a global scale would be potentially extremely damaging for the international economy, including Australia,” he says.

“We should not think our country is immune from the impacts of this trade war… We narrowly avoided tariffs on our steel sector during the last Trump administration and the new approach seems even tougher with the potential to prolong our inflation and interest rate pain.”

After months of speculation, President Trump has delivered on his election promises by imposing 25% tariffs on Mexican and most Canadian imports and an additional 10% on current duties on goods from China. He has also announced a 25% tariff on imports of steel and aluminium from all countries, including Australia, and is looking to enforce further tariffs on other countries and regions.

He aims to bolster US federal revenues, reduce the US’s trade deficit and protect local industries. He also wants to stop fentanyl from illegally entering the US, encourage companies back to domestic production and lower the US’s dependence on global supply chains.

However, a report by professional services group PWC warns that countries on which higher tariffs have been imposed will retaliate, potentially disrupting global trade and supply chains.

What this means for Australian businesses

It is unknown if Trump will impose tariffs on Australia specifically, but the 25% tariffs on US imports of steel and aluminium could affect our resources sector.

Grant Thornton partner Richard Nutt notes that, as the sixth-largest producer of aluminium globally, Australia plays a significant role in the industry.

“These tariffs will create additional barriers to entry into the US market, a historically important trade partner for Australia. Last year, Australia exported 223,000 tonnes of steel and 83,000 tonnes of aluminium to the US. Although Australia has successfully negotiated exemptions in the past, there is no guarantee these will remain in place in 2025,” he says.

But even without direct tariffs, PWC says Australian businesses could be affected by Trump’s trade shake-up. For example, the supply chain costs for Australian businesses with operations in the US may rise, particularly in the manufacturing and retail sectors.

“Many of these businesses depend on supply chains linked to nearby markets, such as Canada and Mexico, or are integrated with value chains that rely on Chinese goods for intermediate or finished products, resulting in a significant cost in procurement,” PWC notes.

In addition, e-commerce shipments to US customers could slow and become more costly. PWC says Trump’s move against the ‘de minimis’ trade rule could hurt Australian retailers selling goods of Chinese origin direct to US customers. It stops goods with a value of less than US$800 from entering the US duty-free and with minimal inspections.

PWC adds that trade tensions could lead to increased scrutiny and compliance costs, as businesses may have to prove the ‘true origin’ of goods to US regulators looking to ensure they are not trying to escape higher tariffs by transshipments or by altering supply chains.

The report also warns that these tariffs could result in shipping volume fluctuations, trade route adjustments and capacity reallocation because tariffs potentially alter the flow and volume of goods between countries and make shipping space/availability and costs volatile.

“Given Australia’s geographical isolation from most of our trading partners, the volatility in cost and reliability of freight could become significant to supply chain cost and performance,” PWC says in its report.

It adds that global trade tensions can also lead to fluctuations in currency markets, affecting Australian businesses trading internationally.

In addition to this, PWC warns that Australia, with its competitive pricing, low dollar and collaborative approach to trade with near neighbours, could become a “dumping ground”. “As the US tariff policy raises international trade costs and decreases product demand in the US market, foreign businesses might seek alternative markets, such as Australia, to ‘dump’ excess stock,” says PWC.

“This influx of foreign products could lead to increased local competition and create downward pressure on domestic prices. Consequently, there may be an uptick in potential anti-dumping measures to safeguard local industries.”

Weaker growth in China

Experts warn that Trump’s imposition of additional tariffs could further slow China’s economy, hurting Australia’s largest trading partner.

Scott French, senior lecturer in economics at the UNSW Sydney, says about 40% of Australia’s exports go to China. Most of this is Australian iron ore and other minerals used in China’s construction and manufacturing sectors.

“If Trump’s tariffs further slow the already sluggish Chinese economy, this will reduce demand for the goods it buys from Australia,” he says.

‘If China’s demand for iron ore falls significantly, this will not only hurt the Australian mining sector, but it could trigger a fall in the Australian dollar, making the things Australians buy from abroad more expensive.

“But the size of the impact of the latest tariffs on China remains to be seen. China has already absorbed the tariffs from the first Trump administration and the latest increase is much smaller than the 60% tariff he previously proposed.”

Some good news for Australians

French says the imposition of US tariffs on other countries may raise the price of their exports to the US, making some Australian exports more competitive.

However, he says the tariffs on China won’t have a big impact on Australia because there’s not much overlap between the products China and Australia export to the US.

That said, there could be a positive impact if China retaliates against the US by imposing tariffs on US goods as it did during Trump’s first term when it introduced extra tariffs on US wheat and other agricultural products.

“A similar move this time could create an opening for Australian farmers to fill the gap,” says French.

And bad news for Americans

Bedassa Tadesse, Professor of Economics at the University of Minnesota Duluth, says politicians often frame tariffs as a way to punish other countries, but they hurt domestic consumers and businesses hardest.

“Whether they’re facing higher grocery bills or disruptions in manufacturing, Americans will feel the strain,” he says.

“When tariffs are imposed, companies must either absorb the additional costs – cutting into profits and potentially threatening jobs – or pass these costs to consumers through higher prices. Small businesses operating on thin profit margins are particularly vulnerable, as many lack the resources to quickly switch suppliers.”

Worse yet, Tadesse says such measures commonly set off a cycle of retaliation. During past trade disputes with the US, some countries responded with counter-tariffs on US products, including textiles, steel and agricultural goods.

“Such retaliatory efforts have led to sharp declines in US exports,” says Tadesse.

Financial facilities to keep your business on track

If you’re concerned about your business in the current global trade climate, there financial facilities available to help maintain cash flow and improve stability. With interest rates set to ease in the immediate term, it’s a good time to explore your options – and there are several funding options designed to help businesses remain stable and grow, even in challenging conditions.

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