American tariffs have raised the cost of selling some Australian goods in the United States. Here, the effect on prices is less direct: tariffs can make some imports cheaper, while fuel and other pressures push costs higher.

A tariff is a tax at the border. If the United States places one on an Australian product, the importer bringing that product into America pays it. The cost may then be shared, in different proportions, by the American buyer and the Australian exporter. It does not mean the Australian government has put a tax on goods arriving here.

That distinction matters because Australians are paying more for many imported essentials. The Australian Bureau of Statistics says import prices rose 5.7 per cent in the June quarter and 6.2 per cent over the year. But the sharp quarterly increase was driven principally by disruption to oil, fertiliser and plastics supplies associated with the closure of the Strait of Hormuz. Imported petroleum products alone rose 47.1 per cent in the quarter. It would be misleading to attribute that broad rise to US tariffs.

What tariffs mean for Australian exporters

Since 24 July, most Australian goods entering the US have faced a 12.5 per cent tariff, subject to exemptions. Separate tariffs apply to particular products, including steel, aluminium and certain copper goods. The rules are significant for an individual business whose largest customer is in America, even if the national economic effect is more modest.

Consider an Australian manufacturer selling equipment to a US customer. If the tariff makes the landed product more expensive, the customer may accept the higher price, demand a discount, order less or seek another supplier. To preserve the sale, the Australian business may have to absorb part of the cost through a smaller margin.

The pressure will differ by product. Goods with few close substitutes may retain their buyers. A supplier competing closely on price has less room to move. Exporters also have to check the exact classification and origin of their goods: an Australian company’s product manufactured in another country may face a different treatment at the US border.

For Australia as a whole, the Reserve Bank has assessed the direct effect of US tariffs on exports as relatively small. Exports to the US account for about 6 per cent of Australia’s total gross exports. The bank expected the wider damage to show up more in export prices than in the volume of goods shipped, although particular manufacturers and other exposed businesses could feel a much sharper effect. That assessment predates the latest 12.5 per cent measure, so it should be read as an explanation of Australia’s exposure, rather than a measurement of that measure’s outcome.

Why a trade war does not make every import dearer

The effect on Australian shoppers runs through several routes, sometimes in opposite directions.

Australia has not imposed a matching general tariff on American goods. Under the Australia–United States Free Trade Agreement, US exports enter Australia without tariffs. An American tariff on an Australian export therefore does not automatically add 12.5 per cent to the price of an American product in an Australian shop.

Trade can also be redirected. If a manufacturer finds it harder to sell into the US, it may seek customers elsewhere. The RBA has identified the possibility that redirected manufactured goods, particularly from China, could put downward pressure on some Australian import prices. Its analysis also cautions that supply chain changes, exchange rates and other costs can pull prices the other way.

The latest figures show why the type of import matters. While Australia’s overall import price index rose over the year to June, the ABS recorded lower import prices for telecommunications equipment and clothing. Fuel, by contrast, rose steeply. A shopper’s experience can differ considerably from the headline figure.

Businesses face a further complication: higher landed costs do not always appear immediately, or fully, on a shelf label. The RBA’s discussions with firms found that fuel and logistics costs remained above their earlier levels in some supply chains, while price sensitive customers limited how much businesses could pass on. Some firms were accepting smaller margins instead.

The larger risk is uncertainty

For an exporter, the problem extends beyond today’s tariff rate. Contracts, investment and plans to enter a new market depend on a reasonable idea of what a product will cost when it arrives. Changing rules make those decisions harder. For an Australian importer, a cheaper offer from an overseas supplier may be welcome, but it must still be weighed against freight, currency movements and the reliability of supply.

The practical question for households is therefore not, “How much have tariffs added to everything?” There is no honest single percentage. The question is which costs are reaching Australia, which goods are affected and whether businesses can absorb them.

The Times View: Tariffs have made access to the US market more expensive for many Australian exporters. They have not, by themselves, made every import in Australia dearer. The danger is that trade uncertainty arrives alongside an existing rise in fuel and other input costs. Australians may never see a tariff listed on a receipt, but they can still feel the strain when the cost of getting goods to market keeps changing.