HOW ANTHONY ALBANESE POLICY COULD INFLAME TRADE WAR WITH DONALD TRUMP

• Labor now subsidising steel and aluminium manufacturing
• Expert warned it could inflame the trade war  
• PODCAST: All the latest headlines, including Trump’s bold move to void Biden’s pardons and Gavin Newsom’s unexpected statue plans

Anthony Albanese's plan to subsidise Australian steel and aluminium manufacturers risks inflaming the trade war with Donald Trump, an expert has warned.

The Prime Minister last week announced a new $750million program designed to 'boost development of new technologies to ensure our metals manufacturers remain globally competitive'. 

'We want to see more Australian workers make more things here,' Mr Albanese said.

'That's why we are allocating funding to back our local metals manufacturers to seize the opportunities of the future.'

The announcement was made on Friday, two days after 25 per cent tariffs were slapped on Australian steel and aluminium exported to the United States.

This was also after US Commerce Secretary Howard Lutnick accused Australia of dumping aluminium at below cost on the American market. 

Dr Naoise McDonagh, a senior lecturer in geopolitics and international trade at Perth's Edith Cowan University, said Trump could argue Australia's new subsidies on steel and aluminium was an attempt to undercut the prices of US manufacturers.

'Trump can certainly weaponise the announcement and superficially it could hold some potential merit,' he told Daily Mail Australia.

'Although Trump does not really need evidence to apply tariffs, many of his justificatory claims are false, misleading or a mixture of both.'

Dr McDonagh said the Australian government looked likely to disguise price subsidies as environmental programs, with the announcement including green aluminium production credits.

South Australia's troubled Whyalla steelworks, now in administration, will also be propped up with taxpayer funding. 

This could potentially spark complaints to the World Trade Organisation. 

'More broadly, green subsidies, whether genuine or being used duplicitously for industrial gain, will become ever more contentious in today's febrile geoeconomic environment,' Dr McDonagh said.

The trade expert said Australian governments would be more likely to subsidise metal manufacturing as the likes of China tried to make other nations dependent on its products.

'Pressure on Australia's government to adopt a more aggressive industrial policy for industries of strategic importance will only grow,' he said.

NSW Treasurer Daniel Mookhey said the state government would now be more inclined to buy Australian steel and aluminium for projects like train manufacturing rather than importing cheaper product from China, as the previous Coalition government did.

'You can buy Australia if you're a patriot, you can also buy Australia if you want world class steel,' he told the ABC's Q+A program on Monday.

'And we talk down the quality of our steel industry but BlueScope Steel in the Illawarra does an amazing job of producing steel for renewable energy but also for trains.

'We are adopting a policy that says, "We are looking to buy steel from Australia, we're looking to buy aluminium with Australia". 

'We are equally wanting to use our purchasing power to put Australia into global supply chains, yes using train manufacturing.

'That is a sound response to the policies that the Trump administration's put in place.'

Mr Mookhey said Australian steel and aluminium was of better quality and argued it would be cheaper to source spare parts locally if something broke. 

'What we're learning as a state government is that when it does come to things like trains, once you factor in everything you pay, having local manufacturing is really helpful when, for example, trains break and you need to repair them,' he said.

'The fact that you can bring in the same sort of steel, rather than have to ship it from the other side of the world, is actually a real cost saving.'

While the World Trade Organisation frowns on subsidies, it considers them acceptable if they are focused on research and development rather than simply reducing prices, and provided they are available to both local and foreign firms.

'R&D subsidies are universally used by all governments and may not distort global markets, hence may not breach WTO rules,' Dr McDonagh said.

The latest $750million in government funding for metals manufacturers comes from the $1.7billion Future Made In Australia Innovation Fund, announced last year in the 2024-25 Budget. 

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2025-03-18T02:53:36Z