Labor will provide $1bn in zero interest loans to help export-focused companies tap alternative markets as Australia seeks to loosen trade ties with the US in response to Donald Trump’s new tariffs.
The lending facility would complement a separate government initiative to fund representative bodies of affected sectors “to secure and grow new markets”.
The pledges, announced on Thursday, were made shortly after Trump’s “liberation day” speech. The US hit Australia with a 10% tariff in response to claims that Australia imposes the same sized impost on US goods through various trade barriers, a claim that Albanese disputes.
Australia has sought to boost trade to countries like India and the United Arab Emirates and sign a free trade agreement with the European Union in a diversification strategy to be fast-tracked amid the upheaval in global diplomatic and economic relations.
Wesley Widmaier, professor of international relations at Australian National University, said it was natural for countries facing tariffs to look for other export markets.
“Countries are looking to do something outside the US umbrella,” he said.
“Everyone is looking at diversifying, from the Europeans to the Canadians and the Australians.”
The Albanese government opted against retaliating with tariffs and instead announced five measures designed to find new markets and offer some protection to affected industries.
These are:
Strengthening the anti-dumping regime to protect against tariff-hit overseas steel, aluminium and other products undermining local manufacturing.
Providing $50m to affected sectors to secure new markets for their products.
Providing $1bn in zero interest loans to help Australian companies capitalise on export opportunities.
Bringing Australian businesses to the “front of the queue” for government contracts.
Establishing a strategic reserve of critical minerals.
While the US only accounts for about 5% of Australian exports, it is the biggest destination for Australian beef exports, taking about 400,000 tonnes, worth $3.4bn, in 2024.
The National Farmers’ Federation president, David Jochinke, said while the sector was “profoundly disappointed” in the US decision, it would not support a response that included reciprocal tariffs.
“The Australian agricultural industry supports a considered and measured approach to negotiations with the United States and will work closely with the government and all sides of politics to seek a resolution to this issue,” Jochinke said.
There were some exemptions to the tariffs, although those sectors could still be caught by future policy announcements.
Australia’s largest pharmaceuticals group, CSL, said “at this stage” its products were not subject to the 10% tariffs.
“CSL is continuing to assess the broader impact of the tariffs and will monitor further announcements by the US government,” the vaccine maker said.
While Australia was hit with the minimum tariff level of all affected nations, it was enough to unsettle the ASX on Thursday, with the benchmark S&P/ASX 200 down more than 1% by early afternoon trading.
Shares in Australian home appliance manufacturer Breville were down more than 5% on Thursday. While it has been diversifying its manufacturing base, it still produces the majority of its appliances in China, which has been hit by a 34% tariff.
