“This imposition of higher tariffs on Australia is unjustified and we will continue to lobby the United States trade representative to remove all tariffs on Australian goods.”
Trade Minister, Don Farrell.
You will have seen in recent news that the Trump administration has hit Australia with an extended 12.5% trade tariff. This extension to the previous 10% tariff increases the cost of your Australian small business exporting to the US, and could have a significant impact on margins.
Let’s explore why Australia is being hit by these increased tariffs and what your business can do to mitigate the impact of increased export costs.
Why is Australia being hit by higher trade tariffs?
The Trump administration is raising tariffs on Australian goods to 12.5% by using a Section 301 trade investigation focused on the use of ‘forced labour’.
After the US Supreme Court struck down the White House’s initial tariff measures, the administration found a legal loophole, using Section 301’s legal authority over ‘unfair trade practices’ to sidestep the ruling.
By framing the policy around forced labour enforcement, Trump implemented higher rates on nations like Australia that lack explicit US-style import bans.
However, the Australian Government has strenuously denied that Australia has a problem with forced labour, as Deputy Prime Minister, Richard Marles, made clear to Sky News:
“In terms of combating forced labour and regulating that in Australia and having laws opposed to that, we have one of the strongest regimes in the world. So we stand with pride in terms of how our legal regime works in respect of forced labour.”
What can you do to mitigate these higher US trade tariffs?
The new 12.5% tariff for AU/US imports is now active, as of Friday 24 July 2026. Importantly, goods already covered by higher tariffs (such as steel and aluminium exports) will remain on those existing tariffs. But most other AU/US imports will be affected.
The Australian Government will continue to push back against the unfounded claims relating to forced labour. But until a reduction in the tariff is negotiated, your Aussie export business is stuck with a significant additional cost to account for when exporting to the States.
3 steps you can take to mitigate the impact
Diversify your export destinations: Look for export markets outside the US, where territories are already covered by existing free trade agreements.
Optimise your tariff classification: Work with a customs broker to review your US Harmonized System (HS) codes to make sure your goods aren’t being over-taxed or incorrectly targeted.
Renegotiate your commercial terms: Share the impact of this hit to your margins with your US buyers. This can be done through careful adjustments to pricing, volume commitments, or shared import duty terms (DDP vs. FOB).
If you’re worried about the impact of the new 12.5% US trade tariff, come and talk to us. We’ll help you visualise the margin impact and rework your export strategy.
