Australia should fight China with export tariffs

The Chinese Communist Party (CCP) continues to threaten Australia with tariffs for daring to seek an independent investigation into the Wuhan Coronavirus:

David Littleproud is the second minister in successive days to admit to being unable to talk to high-ranking Chinese government officials as trade tensions between the two nations continue to fester.

It comes as China is tomorrow expected to announce an 80 per cent import tariff on Australian barley…

David Littleproud is the second minister in successive days to admit to being unable to talk to high-ranking Chinese government officials as trade tensions between the two nations continue to fester.

It comes as China is tomorrow expected to announce an 80 per cent import tariff on Australian barley…

Australian exporters believe an 80 per cent tariff will cripple a once-lucrative market.

Beijing last week also banned imports from four Australia abattoirs last week, which accounted for about 35 per cent of beef exports to China.

The Australian Government should respond in kind with the threat of a 10% China-only export tariff on iron ore, coking coal and natural gas.

Australia is the dominant global supplier of these commodities, which are essential to China’s economic development. Moreover, China’s stimulus almost always manifests in empty apartment and infrastructure building, which are dependent on Australian commodity inputs.

Thus, a 10% export tariff would hurt China financially and send a strong message that Australia has the whip hand on trade and will not be bullied by the CCP.

Unconventional Economist
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    • adelaide_economist

      Yes. It seems China feels OK with all these threats (and carrying some of them out) because they are convinced we will never stray from the (pathetically) slavish approach we usually follow where we never ever retaliate. They are probably right, too.

      • scottb1978MEMBER

        Probably but more is being said and done by our pollies with China than ever before. I guess if there is a vote in it they are prepared to try a bit harder.

        • PlasterMEMBER

          One big staircase just going up and another one just going down

          And another one going nowhere just for show.

    • True. Our farmers deserved drought relief, it’s time we start paying them tariff relief. Otherwise the will go broke and be sold for nothing

  1. Yeah id start by 500% markup on top of all visa applications for the china students to come here.
    Then investigate, arrest and deport local china suspected of espionage or clandestine activity.
    Confiscate the estates of wealthy china who purchased real estate here.

    there is any number of things we could do.
    Lets use this opportunity to investigate and publicize the full extent of the china espionage activities in this country.

  2. Pfh007.MEMBER

    Export Tariff?

    On all exports of commodities or just exports to China?

    Why impose a tariff on OUR exports and be accused of trade warfare?

    Who they sell to could be subject to specific regulation but wouldn’t that just encourage a black market in iron ore diverted to the ultimate purchaser after deliverY to the “front” buyer?

    This is a job for an National Export Volume Auction where the Federal Government sets the total export volume in a period for a commodity and then auctions off licenses to parts of that volume.

    Force our international miners to bid for the right to export and stop China from encouraging international mining companies to drive down the price of our commodities by bidding against each other with our dirt.

    And ensure that the average Australian fully benefits from the exploitation of our non renewable natural wealth.

    • Exactly. We should always have had extra takings on our resources but there’s more than one country that will piss off. So, however, never waste a good crisis.

    • Aside your volume idea, why should we play all nice and polite by the rules if they don’t

      Alexander Downer made complete sense this morning

      Like the export tariff idea especially on students

      • Pfh007.MEMBER


        Why surrender the moral high ground?

        The idea of putting a tariff on exports is pretty weird to start with. Trying to restrict them to one customer is even weirder.

        What are we going to do when Fiji starts ordering hundreds of cheap iron ore and then re-selling it to China for a nice margin?

        Put the tariff on everyone who we suspect might resell the ore to the Chinese?

        It is a pretty batty idea.

        The National Export Volume Auction is probably defensible under WTO rules because it does not discriminate and simply requires anyone who wants to export under the NEVA cap to bid for the volume.

        Rather than not export to China what we should be doing is making sure that the proceeds of this “bumper” ore harvest is invested productively either in Australia or abroad.

        The really stupid bit of our current approach to China is that we allow ourselves to “consume” the proceeds of what is clearly a never to be repeated boom. How many years before China has built out its infrastructure and housing requirements and can access as much steel as it needs from its domestic scrap? I reckon 10 years tops if not less.

        How many billions have we already forgone during the time (about 8 years) that I have been banging on about this export auction idea to the sound of crickets? Hundreds.

        • Take your point

          Counter is: what does occupying the high moral ground get you

          You’re a deeper thinker than me, so I skip the nuance and diplomatic niceties (that’s not meant to offend, by the way)

          I agree re: NEVA (obviously without having given it much [read: any] thought beside reading your excellent posts), but what is the chance that happens

          Poor old Wingnut Birmingham is going to flap around aimlessly decrying the behaviour (read; occupying the high moral ground), whereas China just goes BANG and slaps them on. Just do it back for whatever export you care to name. If it can be done under the aegis/guise of a NEVA, great. If that’s all too hard for the dunderheads in govt just Keep It simple.

          Sorry, am a bit grumpy today. Selling houses sucks

  3. ErmingtonPlumbingMEMBER

    Tariffs on All incoming manufactured Goods would be a more appropriate response and much more beneficial for the employment prospects of our Young Working and middle class Australians.
    Someone needs to tell a bunch of LNP backbenchers that Tariffs could fund a whole wave of new personal income tax cuts!

    • Nah fck that, it will just put up prices of TVs and things because it’s not like we are going to start making them. Better to tax our mineral and energy wealth better and use that money to build things here that we actually need, ya know, nicer cities and renewable energy infrastructure and hospitals and so on.

  4. What are some good historical examples of export tariffs?

    How do they make sense, unless the purpose is to keep the good for domestic use (noting we can’t really use iron ore or coal, beyond a minuscule amount)?

    Do you think China will really care about having to print up a few more billion to buy the minerals? Or will they welcome those opportunity to devalue their currency?

    • Pfh007.MEMBER

      Who would want to put a tariff on exports? It is a bizarre idea.

      Auctioning off the right to export a volume or quantity is about the only thing that makes sense and even then you would only do it when you are concerned that exporters from Australia are competing with each other more than foreign competitors in world markets. Clearly this is the case with iron ore.

      As for import tariffs or quotas, there may be some argument for strategic reasons but before you do that blocking unproductive capital inflows from foreigners is the first step.

      No sale of existing assets to foreigners especially land.

      If they are desperate to export capital to Australia let them build new factories and productive assets.

  5. The LNP and Morrison govt. better be careful they are not cutting Australia’s nose to spite its face by conducting Trump White House agitorop after incompetence on Covid-19 measures?

    ‘Australia not blameless in China trade war. Australia has been imposing hefty duties on Chinese steel, aluminium and chemicals for much of the past decade’

    I’d follow the money of Australian public companies rather than shonky Morrison LNP govt. being short term lackeys for US interests; one sandwich does not make a picnic but recent news:

    ‘BHP completes first yuan-based iron ore sale to China’s Baosteel
    Min Zhang, Tom Daly

    BEIJING (Reuters) – The world’s top listed miner BHP Group said on Tuesday it had made its first yuan-denominated sale of iron ore to China Baoshan Iron & Steel Co Ltd (Baosteel) and would explore using blockchain for such transactions in future.

    BHP said the deal was a part of a 12-month trial and will involve multiple cargoes….. China, the largest iron ore consumer, brought in over 1 billion tonnes of the steelmaking raw material last year and has long sought to gain influence over pricing to help its steel firms weather market fluctuations….. In a separate statement, Baowu noted it had now struck yuan-based deals with the “three giants” of iron ore – BHP, Rio Tinto and Vale.

    The fourth-biggest iron ore miner, Australia’s Fortescue Metals Group, is also selling in yuan after setting up a trading entity in China in April 2019.

    “The active promotion of renminbi settlement in iron ore transactions is not only for operational needs, but also in line with the trend of yuan internationalisation,” Baowu said….. China’s iron ore imports jumped more than 11% in April from a month earlier as steel mills raced to restore production after the coronavirus pandemic paralyzed the economy earlier in the year.’

    Sure others here know better, but what happens if or when, what one assumes have been USD denominated trade deals across various sectors, move away from USDs, and nation state and/or corporate investors even start calling in their USD Treasuries etc.?

    A future of higher interest rates, inflation, printing USDs etc. for indebted US?

    • Jumping jack flash

      As far as im aware anyone can trade in any currency they like, except for OPEC oil, that must be traded with USD.

      And as a result of that shrewd agreement a long time ago a lot of countries need to hold a lot of USD to buy oil with and it is convenient to use them to trade other things with other countries with myriad currencies as well.

      But yes youre absolutely correct. If nobody needs USD they eventually end up back in the US and cause a ton of inflation.

      Once a dollar is created it is hard to get rid of it i think.

    • So BHP/FMG will be sitting on a mountain of RMB, wonder what they’ll spend it on? More dumped steel (it’s the fabricated stuff that does the damage) I guess.

      The AFR whines about dumping duties but they are just a perverse form of industrial self-harm. How good is paying lawyers huge sums to maybe, perhaps get your market back years after the damage was done? Then rinse and repeat ad nauseam.

      But according to the AFR the local industry is evil and being mean…conveniently ignoring the billions of dollars worth of value-added imported steel & ali (made from our exported gas, coal, IO and bauxite) that gets in tariff free at the expense of local manufacturing because some morons read about Free Trade in a text book.

    • While more enlightened nations wean themselves off oil in favour of more sustainable sources of energy, growing nations in Asia and Africa have more Chinese investment, in addition to EU and using the Euro. Australia runs a significant deficit with the US importing capital to ‘invest’ in property and shopping, fuel guzzling SUVs, dud fighter aircraft, crap cultural content and Koch ideology.

      Meanwhile we run a significant surplus with China and we could easily leverage increased RMB funds on more technology, pharmaceuticals, and manufactures imports e.g. that steel could be used for construction of high speed rail employing god knwos how many ‘workers’ in short term and linking up regions in long term?

      Related, while Australians boast about SYD-MEL being one of the busiest air routes in the world, elsewhere in future such flights would be penalised via planned legislation in France/EU through new environmental measures deeming flights under 2.5 hours unnecessary and bad for emissions, in favour of rail.

      Of course it is easier to kowtow to the US, and being manipulated at the same time, while trying to avoid dealing with China (which represents in many people’s minds ‘Asia’); not everyone wants a return to post WWII WASP nostalgia but plan for the future where the US may well be in decline while China will become older before being rich.

  6. Jumping jack flash

    Are we even able to do that? Didn’t we sign some agreement some time ago that said we wouldn’t.. and what about the WTO?

    Remember the shouting when the US did it?

    • There is nothing stopping royalties being raised. Perhaps even a federal royalty, who knows…

      But I wouldn’t see this as a trade “weapon”. If anything, it could be a sovereignty weapon, wielded to ensure that Australians benefit most from the resource endowment.

      But, really, real life does not work like that. If anything, taxes will be hiked for the pedestrian aim of helping “the budget” not for any identifiable strategic purpose.

  7. Cancelation of mining leases of chinese owned opperations on environmental grounds.
    Seizure of investments for non compliance of firb terms.
    All purely coincidental adminisrative measures. Nothing at all to do with their tarrifs that also have nothing to do with wuflu coverup.

    • Pfh007.MEMBER

      Yep, would not be hard to release a few rare butterflies next to some Chinese assets in Australia and then shut down operations pending an environmental review.

  8. Port inspections. We are concerned about possible health and safety issues at Port Headland and we are reviewing whether to suspend operations there for a month to assess whether health and safety rules are being followed.

    Bingo, price of iron ore jumps $20/MT and we don’t stop shipment, they just pay for more for the uncertainty of supply.

  9. The best way to do it would be to impose that additional levy without announcing it publicly and without specifically naming China. That is how you get away with it (i.e. straight out of their playbook – it makes it much harder to retaliate and helps avoid further escalation).

    For example, it could be called the ‘Large Economy Iron Ore Levy’. It could be imposed on the basis that, in these difficult post COVID-19 world we think it is only fair that those large customers in the major markets we supply who can afford to pay more should be paying more.

  10. A better way to do this would be to pass laws that a certain percentage of raw materials have to be value added in australia. Otherwise large tariffs.
    We can say its not specifically anti china, encourages more onshore manufacturing and jobs etc.

      • Sure, but we are not indonesia, as bad as our government has become we are still well ahead in technical competency, and less corrupt.
        Its still a good idea just badly implemented.
        Trying to get any manafacturing back in Australia is going to be hard and costly, processing our mining products is probably the easiest place to start.

  11. John Howards Bowling Coach

    The Tariff and Trade ban issue is very easy to understand from China right now.

    China is very short of $USD now as no one will trade in $RMB and their prime source, their massive global trade surplus vanished with their virus being allowed out into the world. Given no one wants anything sold to China paid in $RMB they have quite a quandary, as they current don’t have hard currency to pay for the imports they need.

    The Aussie Beef and Barley threat is just them not letting their problem be seen for what it actually is and instead lying about the reasons. For example in the post African Swine Flu China, well short on Protein can they really refuse our Beef, NO! They really want it! But they can’t pay right now, so they made up a reason to use this cash shortage to threaten us and get their way.

    The Barley blockade is slightly different as they not only can’t pay, but they want to get their local farmers to grow the crop as import replacement, keep the peasants paid and fed, and give them a price subsidy to boot.

    So always look for the underlying (using lying) reasons for any action or talk from China. They are always up to something.

  12. Lets grow a backbone and implement this and while we’re at it threaten to confiscate all the mining leases and agriculture pastoral lands they own….also stop the super wealthy from buying property here whether residential or commercial.

  13. Fascist China

    50% tariff on baby formula and houses bought by anyone with a Chinese passport.

    • Soft

      ban this fken daegou nonsense.

      and the export of medical stuff not via proper channels

      jesus, soft (not you, Australia Inc)

  14. bolstroodMEMBER

    F#CKN !!!!!
    That seems to be where you are all going here.