Deal or No Deal Impacts of U.S. Tariffs on Australian Exports

The age of free trade is over. That was the message given by President Trump’s 2025 “Liberation Day” tariffs. Ostensibly, the tariffs were intended to rebalance the U.S. trade deficit, but the measures functioned largely as leverage for bilateral trade negotiations. Most partners sought exemptions or new deals, while China imposed reciprocal tariffs. These actions have reshaped trade flows, with implications for Australian exporters. This paper assesses these impacts using the GTAP computable general equilibrium trade model, applying tariff shocks derived from official U.S. Executive Orders. Three scenarios are examined: (i) Liberation Day tariffs, adjusted for numerous exemptions; (ii) Retaliation, where partners impose equivalent tariffs on U.S. exports; and (iii) Realignment, in which the United States scales back tariffs for most partners except China, which maintains higher protection. Preliminary results indicate that Australia loses from widespread retaliation but in other scenarios gains modestly in real GDP. Agricultural effects are mixed: wheat, coarse grains and cotton expand into markets vacated by U.S. exporters, while beef exports to the United States are reduced. Overall, the global realignment scenario—arguably the most likely— offers both risks and emerging opportunities for Australian agriculture.