The United States has recently announced tariffs for many countries on steel and aluminum, but Australia has benefited from an exemption. While this is good news for many Australian companies, the announcement is worrisome for those who know the real effects that could arise from the exemptions.
Recently, FX Australia did an analysis on the basis of the exemption and tariffs, and revealed the pros and cons of the Australian exemption on steel and steel exports. 39, aluminum to the United States. currency markets.
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The United States negotiated with many countries on trade, and after being unable to negotiate, tariffs were put in place. Fees for steel and aluminum are in place for the European Union, Canada and Mexico.
The tariff for steel and aluminum is as follows: a 25% duty on steel and a 10% duty on aluminum imports in from the United States from these countries.
The United States has waived these tariffs for only a few countries. These countries include South Korea, Brazil, Argentina and Australia.
How does this exemption affect Australia directly?
At first glance, the exemption seems to be a good deal for Australia. The exemption granted to the United States for steel and aluminum maintains relations between countries in good health and certainly inspires free trade.
The United States and Australia have agreed that there would be a listing or a limit on the amount of steel and aluminum imported from Australia. The same type of agreement was concluded with Argentina. This ensures that the US market is not flooded with import surges while contributing to increased capacity utilization.
Tariff exemptions give Australian steel and aluminum producers the opportunity to continue to maximize their international sales, but there is a slightly unexpected drawback to the exemption. We will discuss this in more detail in a moment – as well as what is being done to prevent it from constituting a major disadvantage for Australian steel and aluminum companies.
A look at the benefits of the tariff exemption that everyone is talking about
Specifically, the exemptions help preserve fair trade between the United States and Australia. In addition, these tariff exemptions help support jobs in both countries, which is useful for both economies. Here in Australia, these exemptions maintain a balanced growth of trade.
All of these benefits are important to Australia, and our country would probably suffer if high tariffs were applied to our steel and aluminum exports. Our metals market is strong and the exemptions help us keep it. Although it may seem that there are infinite benefits to the exemption, there are some negative impacts …
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The disadvantage of the Australian exemption on US imports of steel and aluminum
Economists and industry experts are perfectly aware of the disadvantages of these exemptions. Considering that countries such as China, Vietnam and India are not exempt from the tariff, they will have excess metal to dump, and they could turn to Australia. If these countries flood the cheap steel and aluminum market, Australian producers would not be competitive. This "dumping" is feared by companies – existing and new – across the country.
Although dumping seems inevitable, the good news is that measures are being put in place to help reduce dumping in Australia.
What is being done to prevent the dumping of cheap metals into the Australian market?
The country is working to put in place proactive measures to discourage dumping and keep the Australian metals market strong. For example, the government is increasing the resources of the Anti-Dumping Commission. Companies caught cheating the system in place face three times the traditional penalties. In addition, an anti-dumping policy is being put in place.
The Anti-Dumping Commission has revised its system to ensure that Australian companies can compete with the import of steel and aluminum. In addition, the Anti-Dumping Commission reduces red tape and improves the security of Australian companies using the system.
In addition, all of these reforms are consistent with international trade obligations and the World Trade Organization of Australia. It's a win-win for anyone who wants to keep the principles of free and fair trade alive and prosperous.
In conclusion …
The Australian metallurgical industry is booming and thanks to the exemption and revised rules put in place by the World Trade Organization of Australia, the economy will remain healthy!