US tariffs have changed again: what Australian businesses need to know

A new 12.5 per cent tariff now applies to many Australian goods, while metals, manufactured products and some pharmaceuticals face much higher barriers

Australian businesses exporting to the United States must adjust to another significant change in American tariff policy.

A new 12.5 per cent tariff now applies to many goods imported from Australia. It replaced the temporary 10 per cent global surcharge that expired on July 24, 2026.

The change does not mean every Australian product will attract 12.5 per cent. Important exemptions remain, while products such as steel, aluminium, copper derivatives, vehicles, furniture, semiconductors and certain pharmaceuticals are governed by separate sectoral tariffs.

For businesses, the central problem is no longer simply whether tariffs exist. It is determining which tariff applies, who carries the cost and whether selling into the United States remains commercially viable.

The national economic consequences may be limited, but the impact on an individual exporter can be substantial.

What changed on July 24?

The United States imposed a temporary 10 per cent global import surcharge in February 2026. It operated for 150 days before expiring.

At the moment that surcharge ended, a new tariff took effect following an investigation by the United States Trade Representative into whether trading partners were adequately preventing the importation of products made with forced labour.

Australia was among 60 economies included in the investigation.

Australian goods covered by the decision are now subject to a 12.5 per cent tariff. Australia received the same rate as 37 other economies, while some countries with complete or partial forced-labour import controls received a 10 per cent rate.

The new tariff does not stack on top of the expired 10 per cent surcharge. It replaces it.

The principal product exemptions applying under the temporary arrangement have continued under the new regime.

The result is a complicated tariff system in which the applicable rate may depend on:

• The type of product
• Its US customs classification
• Where it was manufactured
• The materials incorporated into it
• Whether an exemption applies
• Whether it is already covered by a separate sectoral tariff.

Businesses should not assume that an Australian certificate of origin automatically delivers tariff-free entry under the Australia–United States Free Trade Agreement.

Which Australian businesses are most exposed?

Steel, aluminium and copper businesses

Australian steel, aluminium and certain copper products and derivatives face tariffs ranging from 10 to 50 per cent.

These are separate national-security tariffs imposed under Section 232 of the US Trade Expansion Act.

The exposure can extend beyond raw metal. Finished or partly finished products containing specified metals may also be captured.

An Australian manufacturer exporting fabricated components, building products, machinery or specialised equipment must therefore examine the tariff classification of the complete product as well as its material content.

At the higher end of the tariff range, maintaining the same landed price may be impossible without a major reduction in the Australian supplier’s margin.

Pharmaceutical and biotechnology companies

The most consequential measure may be the announced 100 per cent tariff on certain patented pharmaceuticals and associated ingredients.

For most affected companies, the tariff is scheduled to commence on September 29, 2026.

Generic pharmaceuticals are not presently included. Some products, companies and jurisdictions may receive exemptions or zero-tariff treatment, particularly where US manufacturing or pharmaceutical pricing agreements are involved.

The policy is expressly intended to encourage pharmaceutical production to move into the United States.

Australian pharmaceutical and biotechnology companies need to determine whether their products are covered and whether an exemption, company agreement or US manufacturing strategy is available.

A 100 per cent tariff cannot ordinarily be absorbed as a routine cost of doing business. It may fundamentally change where a product is manufactured, licensed or distributed.

Vehicle and component suppliers

A 25 per cent tariff applies to automobiles, trucks and certain parts.

Australia no longer exports mass-market vehicles at scale, limiting the economy-wide exposure. Specialist manufacturers may still be affected, including businesses producing:

• Mining and off-road vehicles
• Performance components
• Commercial vehicle equipment
• Trailers and specialist bodies
• Aftermarket parts
• Defence-related or emergency-service vehicles.

These businesses often compete on specialised capability rather than the lowest price. Nevertheless, a 25 per cent border charge can materially weaken even a high-value niche supplier.

Furniture, cabinetry and related manufacturers

Upholstered furniture, kitchen cabinets and vanities are also subject to a 25 per cent sectoral tariff.

Australian businesses selling premium furniture or architectural products into the US may have some ability to preserve their margins if customers value design, quality or provenance.

Price-sensitive suppliers will be more vulnerable.

Businesses supplying American construction projects should check whether quotations or contracts allow tariff-related price adjustments. Fixed-price agreements signed before the latest changes may expose the Australian supplier to unexpected losses.

Semiconductor and technology manufacturers

Semiconductors, chips and related products face a 25 per cent sectoral tariff.

Australia is not a large semiconductor producer, but the measure can affect specialised electronics, defence technology, sensors and products incorporating affected components.

Technology businesses must distinguish between tariffs on physical goods and the treatment of software or services.

Cloud services, software subscriptions, licensing and consulting are not normally subject to import tariffs. Hardware accompanying those services may be.

Timber exporters

Softwood timber and lumber face a 10 per cent sectoral tariff.

The significance will vary according to the type and value of the timber, existing supply contracts and the availability of alternative buyers.

Businesses selling differentiated, certified or specialist timber may retain more pricing power than suppliers of easily substituted products.

Food and agricultural exporters

Certain agricultural products, including beef, were exempted from the temporary surcharge, and the principal exemptions have continued into the new arrangement.

This gives important protection to Australian beef exporters at a time when the United States may require imported supplies to compensate for tight domestic cattle availability.

Not every agricultural or food product is necessarily exempt.

Processed foods, beverages, ingredients, packaged products and speciality goods must be checked individually. The classification of a product can matter as much as its agricultural origin.

Premium food exporters may have greater capacity to pass on a tariff than commodity suppliers. A specialised Australian product with few substitutes may retain its US customers even at a higher landed price.

Critical minerals and resource companies

Certain critical minerals, energy products, fertilisers and natural resources were excluded from the temporary tariff regime. The main product exemptions have continued under the new tariff.

This reflects America’s need for secure supplies of minerals and materials that it cannot produce in sufficient quantities.

Australia may benefit from its position as a politically reliable supplier of critical minerals needed for defence, technology, energy storage and advanced manufacturing.

However, businesses should not assume that every mineral or processed derivative is exempt. The treatment can change as material moves further along the value chain.

A raw mineral may receive an exemption while a processed component made from the same resource falls under a different classification.

Online retailers and small exporters

The removal of duty-free treatment for low-value imports presents a particular challenge for small Australian businesses.

Goods valued at US$800 or less no longer automatically receive the former de minimis exemption.

This affects:

• Online retailers
• Artists and craftspeople
• Fashion and jewellery businesses
• Replacement-parts sellers
• Small food and speciality-product exporters
• Direct-to-consumer brands
• Businesses sending samples or demonstration products.

The tariff itself may be only one part of the cost. Customs processing, courier administration, brokerage fees and customer-service problems can make low-value exports uneconomic.

A US consumer who unexpectedly receives a tariff or clearance demand may refuse delivery, dispute the transaction or leave a negative review.

Small exporters must make the likely landed cost clear before the customer completes the purchase.

Who actually pays the tariff?

The tariff is generally collected from the importer when goods enter the United States.

That does not mean the American importer necessarily carries the final economic burden.

The cost may be distributed between:

• The Australian exporter, through a lower wholesale price
• The American importer or distributor, through a reduced margin
• The US retailer, through a reduced margin
• The final customer, through a higher price.

The division depends on bargaining power.

If an Australian product is difficult to replace, the exporter may be able to preserve its price and allow the tariff to be passed through the supply chain.

If competing products are readily available, the US buyer may demand a discount from the Australian supplier or move to another source.

Contracts now matter more

Export agreements should clearly identify responsibility for tariffs, customs charges and unexpected changes in government policy.

Businesses need to review the Incoterm used in every transaction.

Under some arrangements, the buyer is responsible for import clearance and duties. Under others, the Australian seller may be responsible for delivering the goods with duties paid.

The difference can completely alter the profitability of a sale.

Existing contracts should be checked for:

• Tariff-adjustment clauses
• Change-of-law provisions
• Price-review mechanisms
• Force majeure wording
• Minimum purchase commitments
• Currency clauses
• Termination rights
• Responsibility for customs classification
• Responsibility for rejected or returned shipments.

A contract that was commercially sound when signed may no longer be profitable under the new tariff structure.

Do not confuse the invoice price with the landed price

US customers make purchasing decisions based on the total cost of receiving a product, not merely the amount appearing on the Australian exporter’s invoice.

The landed price can include:

• The product price
• International freight
• Insurance
• Tariffs and ordinary customs duties
• Brokerage and clearance costs
• Domestic US transport
• Warehousing
• Distributor and retailer margins
• State and local taxes where applicable.

An Australian exporter should calculate the landed price alongside its US distributor before deciding whether the market remains competitive.

For lower-margin products, a 12.5 per cent tariff may be enough to remove the commercial case for exporting.

For a premium, patented or highly specialised product, the market may remain attractive.

Australian companies manufacturing outside Australia

An Australian-owned business does not necessarily export an Australian product.

If goods are manufactured in China, Vietnam, India or another country before being shipped to the United States, the applicable tariff may be determined by the country of origin rather than the location of the Australian head office.

Simple repackaging or routing through Australia will not ordinarily transform the origin of a product.

Businesses must document:

• Where substantial manufacturing occurred
• The origin of important components
• Whether production meets the applicable rules of origin
• Whether any anti-circumvention provisions apply.

Incorrectly declaring origin can produce penalties, delayed shipments and retrospective tariff liabilities.

Indirect consequences for businesses that do not export

Australian companies without a single US customer can still be affected.

More goods may be redirected to Australia

Manufacturers shut out of the American market will seek customers elsewhere.

Australia may receive additional supplies of machinery, electronics, vehicles, building products, furniture and consumer goods.

Importers and retailers could benefit from lower wholesale prices.

Domestic manufacturers may face more intense competition, particularly if foreign producers are carrying excess capacity or receiving government support.

Businesses should not assume that cheaper imports are temporary. Global supply chains may be permanently reorganised around the new barriers.

Commodity demand may weaken

Australia’s economic exposure to China remains much greater than its direct merchandise exposure to the United States.

If American tariffs weaken Chinese manufacturing or investment, demand for Australian iron ore, energy and other commodities could fall.

That would affect mining companies directly and flow through to contractors, transport operators, regional businesses and government revenue.

Chinese economic stimulus may offset part of the impact, but the outcome will depend on the scale and direction of that support.

Imported American equipment may become more expensive

Australia has not imposed retaliatory tariffs on US goods. American exports continue to receive tariff-free access under the bilateral free trade agreement.

However, US manufacturers may face higher costs for components and raw materials imported into America.

Those increases can flow into the price of machinery, medical equipment, vehicles, aircraft components, software-linked hardware and industrial technology purchased by Australian businesses.

Investment decisions may be delayed

Tariff uncertainty makes long-term planning harder.

A business considering a US distribution centre, manufacturing partnership or acquisition must account for the possibility that exemptions and sectoral rates may change again.

Some companies will postpone expansion. Others may establish production inside the United States to reduce border exposure.

That can protect access to the American market, but it also redirects investment and employment away from Australia.

Does the Australia–US free trade agreement still matter?

The agreement remains in force, but it has not prevented the United States from imposing additional tariffs under its domestic national-security and trade laws.

American goods continue to enter Australia tariff-free, while many Australian goods now face new US charges.

Australia has not retaliated.

That restraint is commercially rational. Imposing Australian tariffs on American machinery, technology, medicines or other products would raise costs for Australian businesses and consumers without guaranteeing better access for exporters.

Productivity Commission modelling has suggested that retaliation would leave Australia worse off than maintaining open trade. It has also identified potential benefits from cheaper redirected imports and investment, while warning that uncertainty and wider protectionism pose serious risks. The Commission’s analysis is available here.

A practical tariff checklist

Every Australian business exporting physical goods to the United States should now:

1. Confirm the US customs code for every product.
2. Establish the product’s legally recognised country of origin.
3. Determine whether the 12.5 per cent tariff applies.
4. Check whether a product exemption is available.
5. Check for separate Section 232 tariffs.
6. Review the tariff treatment of metal content and components.
7. Identify who pays duties under the agreed Incoterm.
8. Recalculate the full landed price.
9. Review contracts for tariff and change-of-law provisions.
10. Update website, checkout and delivery information for US customers.
11. Consider alternative markets where margins are no longer sustainable.
12. Obtain advice from a customs broker where classification is uncertain.

DFAT maintains an updated summary of the US measures and directs exporters to Austrade assistance and US customs resources.

Is the United States still worth pursuing?

For many businesses, yes.

The United States remains a large, affluent market with strong demand for premium food, technology, specialised manufacturing, professional services, medical products and distinctive consumer brands.

A tariff does not automatically destroy an export opportunity.

The decisive questions are whether the product is replaceable, how much margin exists in the supply chain and whether the buyer values the Australian product enough to accept a higher landed price.

Businesses competing mainly on price face the greatest danger.

Those competing on intellectual property, reliability, quality, safety, provenance or specialised capability have a stronger position.

The Business Times View

The latest tariff change should not cause Australian businesses to abandon the United States. It should end any assumption that access to the American market is simple, permanent or guaranteed by the free trade agreement.

Every exporter must now know the classification, origin and landed cost of its products. A general understanding that “Australia faces a 12.5 per cent tariff” is not sufficient when sectoral rates range from 10 to 50 per cent and some pharmaceuticals may face 100 per cent.

The businesses most likely to succeed will be those that can defend their value rather than merely defend their price.

America remains an important opportunity. It has also become a more complicated and politically managed market—and Australian exporters must price that risk into every contract.