Tariff Wars

Earlier this month the Australian Customs and Border Protection Service proposed that a 15.45 per cent tariff on imported steel would help stem the flow of cheap imports being dumped on the Australian Market.

The protectionist measure aims to limit the amount of imported goods into Australia which are below normal value. The steel industry has the most to gain from the proposed tariff and BlueScope steel is the main advocate for the plan.

Customs made the recommendation after finding that dumping had caused material injury to BlueScope with the government having 110 days to respond to the advice from customs.

BlueScope’s Australia and NZ CEO Mark Vasella wants the tariff to protect the industry from cheap imported goods.

“Every country we named, every manufacturer we named, has been found to be dumping hot rolled coil into Australia and injuring our business,” he said.

The tariff applies to hot rolled coil steel, used in white goods and automotive manufacturing which is imported from Japan, Korea, Malaysia and Taiwan.

But with other manufacturers in the country saying the tariff will only hurt their business, the government is dealing with a difficult balancing act over who needs the most assistance and what else can be done.

The car industry in particular has led the charge against the tariff, stating that any tariff on imported steel will push up their costs, making the car manufacturing industry in Australia unviable if access to cheaper steel is cut.

“I’m incredulous at what seems to be the path that is being taken,” said Michael Devereux, General Motors Holden managing director.

“I cannot even begin to tell you how bad that is for our business.”

“What it will do is increase our input costs,”

The car industry employs around 300,00 people but with 85 per cent of the cars bought in Australia being imports, the tariff is being criticised for its potential to cripple an already struggling industry.

Ford and Toyota also joined the fight against the tariff warning that increasing costs would only put the industry under more pressure while Ford’s general purchasing manager even went so far to say that the company would not be using BlueScope steel even if the tariff is legislated.

“Any incremental duties will not add to BlueScope’s product portfolio as we are unlikely to change any steel grades currently in use,” he said.

But while the car manufacturers have slammed the proposal, others are calling on the industry to remember that they too prosper from generous government protection policies.

It has been reported that the Federal Government is preparing a bailout package for the car industry worth more than $5.4 billion. A claim which has seen media outlets taken to court as both the government and the car industry itself does not want exact dollar amounts published. Especially since the money is coming from taxpayers back pockets.

But it’s not just the car makers who are up in arms about the protectionist tariff.

Other service sectors are also arguing that the tariff will make their business costs soar and are urging for government not to go ahead with the plan.

A comment posted by a Man Monthly reader highlights the struggle most manufacturers are facing with production costs and the high Australian dollar.

“Our business only survives because it has access to alternative supply other than our 2 major (sic) aust (sic) manufacturers,” the reader begun.

“Every time we have a possibility of duties/tarriffs our importers hang off on ordering and our Aussie manufacturers get unfettered market share and increase our prices.”

“Competition is fair. All that will happen is our finished goods will come from overseas instead of being manufactured here from cheapish steel. “

This is a view shared by others in the industry also with Master Builders Australia warning that the tariff will have adverse effects on major steel users such as the construction industry and that it should not be implemented.

A D Coote & Co, a streetlight manufacturer has also warned of potential job losses coming off the back of the tariff.

“We’d probably have to look at importing more finished product rather than manufacturing here, which would possibly affect the number of employees we have,” said Mick Eidam, the company’s product manager.

With the government set to make its decision in the coming months and with major conflicts on both sides, what the government is effectively deciding on is if it plans to implement protection policies for major manufacturing sectors in Australia, or if it will cease to use give handouts and let company’s inefficiencies and the market sort out the mess.