Navigating tariff costs and trade disruption for Australian business - KPMG

Australian businesses continue to navigate the complexities and costs associated with trade disruptions, particularly those stemming from China's imposition of tariffs on various Australian goods. While there have been recent positive developments, such as the removal of tariffs on Australian barley, other key sectors still face significant challenges, necessitating a proactive approach to trade compliance and supply chain management.

The trade measures, initially imposed by China in 2020, have had a substantial financial impact, costing Australian businesses hundreds of millions of dollars in tariffs. Specifically, tariffs of 80.5% on Australian barley were removed in August 2023. However, tariffs on Australian wine, which can be as high as 218.4%, remain in effect. Other Australian products, including lobster, beef, and timber, also continue to be subject to these trade barriers, contributing to ongoing uncertainty and increased costs for affected industries.

The primary impact of these tariffs falls on Australian exporters to China, who have had to contend with reduced market access and increased costs, forcing many to seek alternative markets or absorb significant losses. However, the ripple effect extends throughout the global supply chain, affecting importers, customs brokers, and trade compliance officers who must understand and adapt to these shifts. The broader trade environment underscores the importance of resilient supply chains and diligent compliance practices for all parties involved in international trade, regardless of their direct involvement in the affected Australian sectors.

What Importers and Trade Professionals Should Do

In light of these ongoing trade challenges, importers, customs brokers, and trade compliance officers are encouraged to implement robust strategies to mitigate risks and ensure compliance. Key actions include:

• Reviewing Supply Chains: Conduct thorough assessments of existing supply chains to identify vulnerabilities and potential points of disruption.
• Diversifying Sourcing and Markets: Explore new sourcing regions and export markets to reduce reliance on single countries or trade routes, thereby enhancing resilience.
• Utilizing Free Trade Agreements (FTAs): Fully understand and leverage the benefits of existing Free Trade Agreements to optimize duty costs and improve market access where possible.
• Managing Customs Duties: Proactively manage customs duty obligations, including exploring opportunities for duty refunds, drawbacks, and remissions to recover costs.
• Engaging Experts: Work closely with experienced customs brokers and trade compliance specialists to stay informed about regulatory changes and navigate complex trade rules.
• Monitoring Geopolitical Developments: Keep a close watch on geopolitical shifts and trade policy changes that could impact international commerce.