On the matter of the U.S.-Australia Free Trade Agreement (FTA)
The Office of the United States Trade Representative (USTR) situated in The Executive Office Of The President.
The full text of the Agreement is available here and the Advisory Committee Reports are available here. The latest information regarding significant trade barriers can be found in the 2021 National Trade Estimate Report, see here.
Australia Trade Summary
U.S. goods and services trade with Australia totaled an estimated $77.1 billion in 2022 (latest data available). Exports were $52.1 billion; imports were $25.0 billion. The U.S. goods and services trade surplus with Australia was $27.1 billion in 2022.
U.S. goods exports to Australia in 2023 were $33.7 billion, up 10.2 percent ($3.1 billion) from 2022 and up 29 percent from 2013. U.S. goods imports from Australia totaled $16.0 billion in 2023, down 1.3 percent ($216 million) from 2022, but up 72 percent from 2013. U.S. exports to Australia account for 1.6 percent of overall U.S. exports in 2023. The U.S. goods trade surplus with Australia was $17.7 billion in 2023, a 23.2 percent increase ($3.3 billion) over 2022.
U.S. exports of services to Australia were an estimated $21.6 billion in 2022, 30.6 percent ($5.1 billion) more than 2021, and 5 percent greater than 2012 levels. U.S. imports of services from Australia were an estimated $8.8 billion in 2022, 41.4 percent ($2.6 billion) more than 2021, and 20 percent greater than 2012 levels. Leading services exports from the U.S. to Australia were in the financial services, travel, and telecommunications, computer, and information services sectors. The United States has a services trade surplus of an estimated $12.7 billion with Australia in 2022, up 24.1 percent from 2021.
U.S. foreign direct investment (FDI) in Australia (stock) was $173.7 billion in 2022, a 1.6 percent decrease from 2021. U.S. direct investment in Australia is led by nonbank holding companies, mining, and manufacturing.
According to OEC.World:
In October 2024, United States exported $2.49B and imported $1.59B from Australia, resulting in a positive trade balance of $901M. Between October 2023 and October 2024 the exports of United States have decreased by $-432M (-14.8%) from $2.93B to $2.49B, while imports increased by $195M (13.9%) from $1.4B to $1.59B.
On the fifth day of the US 47th Presidency the USTR issued the following statement:
USTR Announces Review of Unfair Foreign Trade Practices
January 24, 2025
WASHINGTON-- The Office of the U.S. Trade Representative announced today that it will review foreign trade practices to account for those practices which may be unfair to the United States, including those practices that may be unreasonable or discriminatory and that may burden or restrict United States commerce.
This review is conducted pursuant to Sections 2(c) and 3(c) of the Presidential Memorandum "America First Trade Policy" signed on January 20, 2025.
By 1 February 2025, the 12th day of this current presidency, at least the first three of what appears to be cursory reviews of foreign trade practices (allegedly enabled by US International Emergency Economic Powers Act) had been completed and Canada, Mexico and China had received notice of an increase in tariffs across the board on their goods & services entering American territorial boundaries.
NOTE: Previous to this the vast majority of U.S. imports from Canada and Mexico could enter the U.S. duty-free, thanks to the US-Mexico-Canada Agreement.
From the start date of this new tariff regime on 4 February 2024, these Canadian, Mexican and Chinese goods & services have an estimated combined value at the end of the first 12 months of more than US$1 trillion.
As the actual dollar cost of these tariffs are born predominately by US importers of Canadian, Mexican and Chinese goods/services and businesses are not prohibited from passing 100% of tariff-induced costs onto the consumer, although the impact of these tariffs will be felt in all four national economies it has been calculated that with the initial retaliatory counter tariffs in place US Gross Domestic Product (GDP) growth will potentially halve in 2025, subsequently significantly impeding America's economic growth.
Now that he has started a trade war with his two largest free trade partners, it appears that Trump wants to temporarily de-escalate tensions and has suspended imposing the new tariffs on Mexico for a month and appears to have spoken with the Canadian prime minister with unspecified results.
There are perhaps lessons here for Australia when Trump announces increased tariffs on Australian exports to the United States.
Hopefully the lesson learnt is that Australia should match any new tariff rates percentage point for percentage point across the board and insist there is no bargaining this position away - either by agreeing to an offer of a smaller increase in US tariffs, by the US excepting certain goods & services from these tariffs or by entering into new or altered agreements on any matter in which Australia and the United States can be thought to have a mutual interest as a condition of an easing or removal of tariffs.
Repeatedly stating with strong emphasis that under the 2005 Australia-United States Free Trade Agreement (AUSFTA) the US already shows a trade surplus with Australia that it knows it can bank - and it has been certain of that trade surplus almost without exception for the last 123 years since 1901 when the newly established Commonwealth of Australia was exporting A$6.9 million (7.0% of all exports) to the US and was importing from the US A$11.7 million (13.8% of all imports) in return.
