THE Hunter economy may well have diversified away from its historic industrial base, but this region is still home to the Tomago Aluminium smelter, the Mayfield rolling mills – taking steel from the Whyalla steelworks – and the Comsteel electric arc steelmaking furnace and related businesses at Waratah.
Each of these operations has a substantial role to play in the Australian metals industry, and all of them, together with their employees and other stakeholders including suppliers, are keeping a very close eye on US President Donald Trump and his apparent determination to take the world’s biggest market economy back down the road to protectionism.
It is too early to predict with certainty what impact his proposed import tariffs of 25 per cent on steel and 10 per cent on aluminium would do to his own country, let alone what flow-on effects might be felt here, 15,000 kilometres from Washington.
But the biggest threat to Australia is not to any exports of steel and aluminium to the US – such as they are – but to our domestic markets, which would likely face extra pressure from global producers priced out of the US by the steel tariff, especially.
President Trump may well like to Tweet that “trade wars are good, and easy to win”, but the reality is somewhat different.
Australia has been a world leader in terms of cutting tariffs and reducing trade barriers, and even a once-protectionist union movement today broadly accepts that a freeing-up of global trade has done more good than bad.
The Australian Workers Union, the biggest union in the steel and aluminium industries, is up in arms about the Trump threat, saying our industries could be “decimated” by any punitive US move.
For all of its perceived faults, the World Trade Organisation has an extensive set of rules and regulations in place to control the sort of artificially subsidised product dumping that President Trump says he is protecting American workers against.
Ignoring the WTO framework, and going it alone on across-the-board tariffs, could well trigger a trade war with the potential to undo decades of trust-building trade reform.
Although Australia has gone cap-in-hand to the Trump administration to seek exemptions from any tariffs, the better idea would be to use our economic success to show that open markets, not closed doors, are the way to grow an economy.