Eggs in more baskets: protecting Australian agricultural exports from US tariffs
Australia’s export-oriented industries, particularly agriculture, need to diversify their markets, with a focus on Southeast Asia. This could strengthen economic security and resilience while deepening regional relationships.
The Trump administration’s decision to impose tariffs on Australian steel and aluminium has caused doubts about the strength of the relationship between Australia and the United States. While the US has not yet imposed tariffs on Australian beef and other agricultural products, the current unpredictability of US trade policies means these industries could soon be on the chopping block. This would harm Australian primary producers and have significant social effects on rural communities, including in the strategically important north.
The rumblings of a shifting world order are impossible to ignore. We cannot pretend that the post-Cold War order, in part defined by the US’s championing of trade liberalisation, is still healthy and intact. Middle powers, perhaps the chief beneficiaries of the rules-based order, bear a particular responsibility and capacity to preserving it. The shakeup of the global trade system may require us to re-evaluate our export posture; Australian governments and businesses must prepare for this.
Australia exports approximately 70 percent of the agricultural, fishery and forestry products it produces. The US is the second-largest market for Australian agricultural goods, taking $6.8 billion of them in 2023–24, with beef, lamb, dairy and wine among the most valuable. The loss of this market would deal a great blow to many agricultural businesses and communities across Australia.
These economic challenges are clear, but agricultural export tariffs would also have concerning social ramifications. Economic loss leads to disillusionment, unemployment and scapegoating, fuelling political and social discontent.
The development of northern Australia, vital for Australia’s strategic position and foreign policy, would be at particular risk if trade barriers curtailed agriculture—one of the region’s key economic engines and forces of community life.
Australia has recent experience in diversifying markets for our agricultural exports. In the face of trade barriers erected by the Chinese government beginning in 2020, Australian officials and agricultural industries did well to find other destinations for some affected products. Even when the Chinese market reopened, these other markets remained favourable.
Southeast Asian markets are particularly promising for a variety of reasons. One is that together they already buy more Australian agricultural products than the US does.
The region’s largely tropical climate makes it unsuitable for the kinds of products grown in Australia’s mediterranean, sub-tropical and semi-arid zones. Australian exports can play a more prominent role as Southeast Asia’s population rises and consumer preferences change, with both factors driving the demand for greater volume and diversity of food products, especially animal protein.
Furthermore, the US is also a significant agricultural exporter to the region. It shares six of its top 10 export markets with Australia, all in East and Southeast Asia. Should the Trump administration continue to impose tariffs, and should regional nations introduce reciprocal tariffs, Australia could fill some of the US-shaped holes.
South and Southeast Asia’s textile industries are also markets for Australian natural fibres such as cotton and wool. Currently, 60 percent of clothing is made with petrochemical fibres. But campaigns aimed at reducing this amount could drive global demand for natural fibres, benefitting Australian producers and the environment. Southeast Asia also presents a fantastic market for raw goods to be processed and exported, even back to Australia, due to moderate labour costs, lower utility costs and proximity to markets. This provides mutual economic and social benefits.
Other markets should also be considered. While Southeast Asia’s tropical produce is plentiful, New Zealand’s is not. Australia is the largest exporter of tropical fruits to New Zealand, but there is still room to grow this profile. This would particularly benefit northern Australia, where many tropical fruits are grown.
In East Asia, Australian high-quality agricultural products are particularly prized. Australia should boost agricultural-product promotion campaigns in the region, which are already quite creative.
Australia’s agricultural sector will continue to be important, yet vulnerable to trade insecurity. Through multilateral groups such as the Cairns Group and MIKTA—Mexico, Indonesia, South Korea, Turkey and Australia—Australia should continue to reinforce the benefits of open trade, while also being alert to the challenges it can create for communities large and small.
As we see in the US, serious public grievances arise when negative domestic effects of international trade aren’t addressed. Governments and civil society must manage economic transitions effectively and develop adequate supports during the process. This must be supported by responsible corporate governance, alive to the ethical effects of economic change.