Trump’s new tariffs could hit Australian 4x4 cars and gear HARD – here’s what you need to know

US President Donald Trump called it Liberation Day. The rest of the world took a deep breath and waited for Payback Day.

In a startling piece of captain’s-call legislature – the type of which had already characterised the second-term Trump administration, not even a full four months into its four-year term – Trump imposed tariffs on every one of its global trading partners, Australia included, of course.

The question now revolves around what it means to those of us who might otherwise be in a position to purchase a US-made car or accessories for it. Not to mention what it means to Aussie businesses selling their product into the US, where Australian-made off-road gear is highly regarded as among the best in the business.

So let’s stand back and take a critical look at what MIGHT happen next. Let’s start with what the hell is a tariff anyway.

In its simplest form, a tariff is a form of market protection (in this case, the USA market) that works by imposing what amounts to a tax on goods imported from another country. Effectively, they’re trade barriers that increase the price of an imported product in the country that imposed the tariff. Usually, that tariff-induced price increase is a percentage of the cost of that product.

So, a $100 (wholesale) Australian-made snorkel exported to the USA, will now carry a 25 per cent tariff which means the importer pays $100 for it plus another $25 to the government as the tariff amount. And that’s the bit a lot of people are getting wrong: It’s the importer, not the Australian exporter, who must pay the tariff to the US government. Of course, it’s not going to be that simple, right? Right.

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Historically, tariffs have been used to give locally produced goods a price advantage (which fits with the Trump government’s narrative that the rest of the world has been cheating the USA for decades). But the World Trade Organization points out that tariffs also raise revenue for the government that imposes them. In many cases, this has meant that the tariff has been passed directly on to the end consumer, so it will be the American public ultimately paying for Liberation Day. Trump himself has admitted there could be some pain for his citizens as a result of the move.

But here’s where that ‘it’s not that simple’ stuff comes in. Even though the exporter does not pay the tariff, the consumer price hike at the other end of the supply chain usually means reduced demand for those products. And right there is the potential hit for Australian companies exporting to the USA.

The Liberation Day announcement handed out a blanket 10 per cent tariff to all America’s trading partners, as well as a higher ‘reciprocal’ tariff placed on countries which President Trump has deemed to have been a poorly behaved trade partner in the past. Hardest hit of those were Malaysia and Cambodia (49 per cent), Vietnam (46 per cent), and Sri Lanka (44 per cent). China copped a 34 per cent tariff (and has since `reciprocated’ with its own 34 per cent slug on US goods) and the European Union was slapped with a blanket 20 per cent tariff. Interestingly, Britain was handed the baseline 10 per cent impost.

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And Australia? We ‘escaped’ with the minimum 10 per cent tariff. But unlike some other tariff impositions in the past where certain product categories or industries have been targeted and others ignored, this time, it’s a blanket deal which means virtually every Australian export to the USA will attract the 10 per cent tax.

And the ones that don’t? Oh, they’ll be hit with a 25 per cent tariff and, unfortunately, many of the goods involved relate to the automotive industry. They include pretty much anything that contains steel or aluminium; chassis and drivetrain products; tyres and inner tubes; bodies and body parts including glass and mirrors, engines and components; and electrical systems including compressors.

Just think about how many Australian-engineered and made 4×4 accessories like ARB bull bars and compressors are sold to US-based off-roaders, and how many electronic ECU modules an industry leader like Haltech sends to US street machiners and hot-rodders, or how many sets of Harrop Engineering brakes are sold in the US each year in the high-performance aftermarket. They’re all now subject to that 25 per cent tariff and they all stand to suffer severe demand fall-off as the price to the US consumer spirals as a result.

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Ironically, the tariffs actually hit even the US-headquartered car companies including Ford and General Motors. At the moment, 80 per cent of Ford’s US-showroom models are made in the USA, but GM has plants in Mexico and Canada that supply many of the models and parts for those models sold in the USA. Chevy’s LS range of V8 engines, for instance, are made in Mexico. And those cars and parts, even though badged as Chevys, will be subject to the tariff. Some American-branded cars are very likely to be more expensive for Americans. How will Joe Average of Downtown Idaho feel about a price hike on his next Silverado on the basis that Donald Trump doesn’t like Mexicans?

Stellantis, owner of the Jeep and RAM brands (among others) has pointed out that American-owned brands build more than a million cars a year in Canada, using 50 per cent American parts and 55 per cent American raw materials. The inference being that to make these cars more expensive and, therefore, less attractive to US buyers is something of an own-goal, since US revenue from those raw materials and parts would fall in line with any slump in sales.

In fact, as I write this, word has just come through that Stellantis (owner of Jeep, Dodge and RAM – and others) will lay off 900 workers in the US and temporarily pause production at two plants in Mexico and Canada, quoting the new tariff as a direct cause. As many as 46 per cent of the vehicles sold new in the USA last year were imported.

We contacted the Australian importer of RAM Trucks, Ateco Group, but a spokesman would not comment on the moves, confirming only that ‘it’s too early to know’ what’s likely to happen.

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And what of Aussie consumers? It’s no secret that the likes of the Ram 1500, Chevy Silverado and Ford F-150 have all enjoyed success here. Anybody who needs to tow anything heavy understands the value of these vehicles. But will the tariff on imported parts be used to force up prices? Will US domestic demand for them rise or fall, causing either a supply pinch or a glut at this end? Can local importers absorb any price hikes or will the Aussie consumer be paying for Liberation Day?

If you’re thinking about buying a US-made pick-up (or Jeep) here, perhaps you might be lucky and prices won’t move much if at all. Australian PM, Anthony Albanese, has already said that this country won’t be playing tit-for-tat and imposing our own tariffs on US-made goods, so the Aussie importers of such things won’t bear any additional cost. But that’s only on one level.

Because if demand for imported cars and trucks falls in the US, then that void might be filled by locally-made vehicles which, in turn, may mean we can’t receive the volumes of those US-made vehicles we currently do. Enter the laws of supply and demand. We’ve already recently seen during Covid what a global supply chain crisis can do to retail prices.

Could be that Liberation Day might, in terms of global trade, make Covid look like a runny nose.

This is just the beginning. In part two, we’ll unpack how Aussie brands – from 4×4 accessory makers to high-tech tuners – are planning to adapt to the new trade reality. And what it could mean for local jobs, pricing, and global reach.