The steel and aluminium tariffs imposed by the United States under the administration of President Donald Trump came into effect recently, marking a significant increase to 50 per cent on imports of these metals.

According to Australian Treasurer Jim Chalmers, the tariffs could adversely affect the global economy, suggesting that Australia may not be insulated from their impact.

Chalmers described the enactment of these tariffs as an act of 'economic self-harm' and stressed that the ramifications would extend beyond the US, potentially leading to increased prices for various goods and an escalation in global trade tensions.

Economists have indicated that the tariffs may lead to higher costs for US manufacturers reliant on imported metals.

Professor Tim Harcourt, chief economist at the University of Technology Sydney, noted that many American factories utilize steel, and the resulting price hikes could therefore have a damaging effect on several industries, particularly those producing machinery and canned goods that Australia imports from the US.

Despite the anticipated challenges, Harcourt suggested that the impact on Australian consumers may be limited due to the strength and competitiveness of the local steel industry.

Notably, BlueScope Steel's North Star mill located in the US could see some benefits from the tariffs, potentially increasing its market dominance amid rising costs.

Chalmers acknowledged that while Australia is relatively well-positioned to handle the effects of these tariffs—citing the country's strong steel exporters—there might still be difficulties ahead for local manufacturers, as about 10 per cent of Australia's steel and aluminium exports are targeted towards the US market.

However, he expressed confidence in the ability of Australian companies to seek out lucrative markets, particularly in Asia and India, where they can maintain or grow their export volume without the burden of US tariffs.

Harcourt also pointed out that Australian steel producers are likely to explore new trade opportunities, especially in regions unaffected by the tariffs, which may help mitigate the economic fallout.

He underscored that Australia has a well-established reputation in metal exports, suggesting that trade with partners in the Asia-Pacific could remain robust despite the challenging international climate.

The tariffs were implemented as part of Trump's broader strategy to bolster the US steel industry and enhance domestic production, a policy shift that underscores the ongoing trend of using tariffs as instruments of national policy.

Trump's announcement of increased tariffs coincided with moves to protect domestic industries critical for national defense, a decision met with various international reactions.

While the White House has announced exemptions for specific countries, including the United Kingdom, the administration maintains that tariffs serve to decrease dependence on foreign materials and strengthen national capacity.

The move to elevate tariffs reflects a growing inclination among world leaders to employ trade measures for extensive geopolitical reasons, following precedents such as China’s tariffs on Australian goods after diplomatic strains.