Sigh of relief but the risks remain
AUSTRALIA is still at risk of suffering collateral damage from a global lurch towards protectionism despite securing exemptions from United States steel and aluminium tariffs, experts say.
Shares in BlueScope Steel and Rio Tinto jumped yesterday after Australian delegates and the Federal Government succeeded at the weekend in securing the exemption.
But the threat of global trade disputes had not receded, economists said, and Australia would be among the biggest losers if they were to break out broadly.
Amid strong gains for key miners, the benchmark ASX 200 index climbed 0.6 per cent, ending the session just shy of the 6000-point level.
BlueScope shares rallied 3.7 per cent to $15.88, recovering much of the ground they had lost in recent trading sessions and adding $300 million to the group’s market value.
They had tumbled 6 per cent last week after US President Donald Trump’s administration unveiled plans for a 25 per cent tax on imported steel and 10 per cent on aluminium.
Australia joins Canada and Mexico as nations exempt from those tariffs.
Rio and BHP Billiton also gained ground yesterday, closing 2.3 per cent and 2.1 per cent higher respectively.
Less than 1 per cent of Australian steel exports and 1.5 per cent of Australian aluminium exports go to the US.
Analysts and lobbyists welcomed the exemption but said concerns remained.
UBS analyst James Brennan-Chong said steel prices could suffer further turbulence as a result of the US tariffs.
CommSec senior economist Ryan Felsman said any retaliation from the European Union and China could weigh on global economic growth.
If trade disputes spread to other sectors such as agriculture, it would likely also exact a toll, he said.
“Australian beef-meat exports would be hurt — our largest export to the US totalling $2.4 billion — by potential agricultural trade barriers, if enacted,” he said.
The Australian Industry Group also said the exemptions would not shield Australia from the fallout of any broader trade war.