US President Donald Trump says he will not be slapping tariffs on Australian aluminium and other products, despite reports his administration was contemplating the potentially volatile move.
The New York Times reported the tariff proposal was supported Robert Lighthizer, the US trade representative, and Peter Navarro, director of White House trade and manufacturing policy, but faced fierce opposition from US military officials and the State Department.
Australia was one of the few nations to avoid Mr Trump’s tariffs on aluminium and steel last year after then prime minister Malcolm Turnbull intensely lobbied the president.
“The Australian situation is interesting,” Mr Trump said on Sunday (US time) before boarding Air Force One for his state visit to Britain.
“But the relationship is very strong.
“No, we’re doing a very, very special relationship with Australia.”
The pro-tariff advisers reportedly urged the President to hit Australia in response to a surge of Australian aluminium in the American market over the past year.
Exempting Australia from tariffs effectively allowed Australian producers to sell cheaper metals to the United States than their competitors from Europe, North America and Asia.
According to The New York Times, aluminium imports to the US from Australia rose by 45 per cent from 2017 to 2018. They are up even more, by 350 per cent, for the first three months of 2019, compared with the same period in 2018.
But Australia remains a relatively small supplier of aluminium to the United States, accounting for about 6 per cent of total imports so far this year, according to the US Geological Survey.
However, the newspaper reported the US Defence and State Departments told Mr Trump the move would alienate a top ally and could come at significant cost to the US.
Australia is a key military ally in the Asia-Pacific region.
Mr Trump hit allies and foes last year with 25 per cent tariffs on imported steel and 10 per cent on aluminium, while avoiding Australia.
Some countries, such as Brazil, Argentina and South Korea, won temporary exemptions on some of their imports, but ultimately agreed to limits on how much metal they could ship to the United States. But Australia’s full exemption appears to have been the work of Mr Turnbull, who reached a handshake deal with Mr Trump in 2017 to avoid the tariffs.
Mr Trump is also engaged in an escalating trade war with China and in recent days threatened to impose tariffs on Mexico if they did not stop illegal immigrants entering the US from their nation.
Australia is also on the President’s radar with some Republican members of Congress and his former aide, George Papadopoulos, questioning Australia’s role in the opening of the FBI investigation into Russian ties to the Trump election campaign in 2016.
Then Australian high commissioner to the UK Alexander Downer met with Mr Papadopoulos in 2016 at a London bar.
Mr Downer said Mr Papadopoulos told him at the bar Russia had damaging material on Mr Trump’s presidential rival Hillary Clinton.
The information was forwarded to Canberra and then passed on to US intelligence services and the FBI.