Steve Ciobo unclear on whether Trump’s 25% tariff affects Australia after speaking to US trade secretary

The Turnbull government still doesn’t know if the US steel tariffs will apply to Australia, as a decision has not yet been made by Donald Trump.

The Australian trade minister, Steve Ciobo, revealed that he had spoken to the US trade secretary, Wilbur Ross, but was still unclear about whether the tariffs would apply to Australia.

The statement is embarrassing for the Turnbull government because it believed that it had secured an assurance from the US in July that Australia would be exempt.

Amid escalating protectionist rhetoric between Trump and Europe, Ciobo suggested Australia would combat dumping but was not inclined to retaliate with steel tariffs of its own. Although Ciobo did not rule out retaliation, the Australian prime minister Malcolm Turnbull said it was “absolutely clear” Australia wants more trade and open markets.

On Friday Trump announced the US would this week impose impose tariffs of 25% on steel imports and 10% on imported aluminium, sparking concern from the Australian government, which believed it had negotiated an exemption from US protectionism on steel.

On Sunday Ciobo told Sky News it was unclear whether Australia would be captured by the US policy because the reach of the tariff had “yet to be determined”.

“What is clear is the US is still working through the detail with respect to this announcement so the extent to which Australia may be captured is yet to be confirmed,” he said.

Ciobo referenced the assurance given to Australia but said it was up to Trump whether exemptions would apply. The trade minister said Australia had not been snubbed because Canada and the European Union were also unsure of the reach of the tariffs.

Europe has warned Trump to expect retaliatory strikes against well-known American brands like Harley-Davidson, Levi’s jeans and Kentucky bourbon, if he kicks off a trade war by going ahead with with punitive tariffs.

On Sunday morning Australian time Trump tweeted a warning to the EU that if they increased their trade barriers in retaliation the US “will simply apply a tax on their cars which freely pour into the US”.

Asked about the growing war of words, Turnbull told reporters in Sydney that he was a “very outspoken advocate” for free trade. He described protectionism as not a ladder out of the hole of low growth but rather “a shovel to dig the low growth trap deeper”.

Ciobo said he was concerned by an “escalation of rhetoric” threatening protectionism, labelling higher tariffs across economies and products a “very bad outcome” that would slow growth.

He said if steel products from other countries previously destined for the US were diverted to Australia it would not accept “cheap product flooding into the Australian marketplace, particularly if its below cost”.

“We have in place an anti-dumping commission, its job is to be steeled against these sorts of matters and they’ll be in a position to ensure we don’t see loss-leading product entering Australia.”

Asked about retaliation, Ciobo noted that increasing tariffs would “further impoverish people”. “There is no prosperity at all that flows from putting up trade walls or higher taxes on traded goods.”

He said it “doesn’t make good policy sense” but refused to rule out retaliation.

The chief executive of the Australian Industry Group, Innes Willox, said the tariffs were directed at China but Australia risked becoming “collateral damage”, despite the fact it is not a big player in the market. Australia produces just 0.2% of steel in the US and 1.5% of its aluminium.

Willox said that Ross was “virulently anti-China” and suggested exemptions to the tariffs would be politically difficult because people would ask “if there are exemptions for us, why wouldn’t there be exemptions for others?”.

He warned that US protectionism and international retaliation could have a “very deep” impact on global growth.