Australia’s core mining exports look set to escape the worst of a new 12.5 per cent US tariff, with the country’s bulk commodities largely bound for Asia rather than North America.

The Office of the United States Trade Representative (USTR) has put tariffs of 10–12.5 per cent on 60 economies, after investigating whether trading partners were doing enough to keep goods made with forced labour out of their supply chains. Australia’s rate starts at 2:01pm Friday AEST under section 301 of the Trade Act of 1974, replacing the temporary 10 per cent tariff that ends at the same time. The Australia–United States Free Trade Agreement has given most Australian exports tariff-free access to the American market since 2005.

The USTR carved out exemptions for raw materials where tariffs could leave American supply short, for products that could disrupt the wider economy, and for goods the US cannot produce in enough volume or at a reasonable price, or buy from anywhere else.

Australian iron ore, coal and gas mostly head to Asia, so direct exposure stays relatively contained. The previous round of US tariffs, including 50 per cent duties on aluminium and steel, saw Australian exports to the US climb more than 20 per cent as buyers moved away from more heavily taxed suppliers elsewhere.

Critical minerals are the area worth watching. Australia and the US signed a framework last October committing $US1 billion ($1.5 billion) each towards a $US8.5 billion ($12.9 billion) pipeline of projects, with Alcoa and Sojitz’s gallium recovery project in Western Australia and Arafura’s Nolans project in the Northern Territory among the first to benefit.

Washington wants minerals it cannot mine or process at home, and that need is what put the exemptions in the document.

While the 12.5 per cent measure seems unlikely to significantly disrupt Australia’s major mining export streams in isolation, what the tariffs mean in practice comes down to the product being exported, where it is going and how it is classified.

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