In April, we modelled those measures<\/a>, together with retaliation by trade partners. We reported they could cut more than 2.5% from US gross domestic product (GDP), reduce US short-run employment by 2.7%, and cut US real investment by almost 7%.<\/p>\n In the wake of those \u201cLiberation Day\u201d tariffs, financial markets took fright. On April 9 the Trump administration hit pause<\/a>: the \u201creciprocal\u201d tariffs were deferred until July 9 and replaced by an across-the-board 10% tariff increase, with a handful of exceptions.<\/p>\n Even so, the Trump tariff drum kept beating. Duties on steel and aluminum<\/a> were doubled to 50%, and copper was swept in with its own 50% rate. Washington announced some \u201ctrade deals\u201d with:<\/p>\n \u2022 United Kingdom \u2013 dropping the UK rate<\/a> to the base rate of 10%<\/p>\n \u2022 China \u2013 cutting<\/a> the tariff to 34%<\/p>\n \u2022 Vietnam \u2013 reducing<\/a> its \u201creciprocal\u201d tariff from 46% to 20%<\/p>\n \u2022 Japan \u2013 a 15% levy<\/a> on all imports, including motor vehicles (otherwise tariffed at 25% for other regions)<\/p>\n \u2022 European Union \u2013 just announced at the weekend, reducing its \u201creciprocal\u201d tariff from 30% to 15%<\/a>.<\/p>\n When the first pause expired this month, a second extension pushed the start date for the \u201creciprocal\u201d tariffs to August 1. But the tariff announcements keep coming, with recent threats to apply revised tariffs on imports from many trading partners, including a 50% tariff on imports from Brazil<\/a>.<\/p>\n What do the new tariffs mean for the economy?<\/p>\n To find out, we reran our global economic model with the US tariff schedule as it stood on July 28, again allowing trading partners to retaliate proportionally (excluding Australia, Japan and South Korea, which have ruled out retaliation<\/a>). This table compares the April projections with the updated results.<\/p>\n Damage to the US economy is less severe, but still substantial. In 2025, the falls in real (inflation-adjusted) consumption narrow from a decline of 2.4% to 1.6%; real gross domestic product (GDP) from a fall of 2.6% to 1.7%; and real investment from a slide of 6.6% to 5.1%.<\/p>\n For the US, lower tariffs on the EU, UK, Japan, Vietnam and especially China, mean less disruption to short-run employment and long-run capital markets, lower efficiency losses in product markets, and less punishing retaliation from abroad. <\/p>\n Beijing also benefits from Washington\u2019s climbdown. Short-run losses in Chinese real consumption shrink from 0.4% to 0.1% in 2025, and the GDP loss all but disappears. Cutting the US tariff on Chinese goods to 34%, and the corresponding pullback in China\u2019s retaliatory duties, explains most of the improvement.<\/p>\n Australia remains a beneficiary, but to a lesser degree. In April, we projected short-run gains of 0.6% in consumption and 0.4% in GDP. These are now more modest, with a gain of 0.3% and 0.2% respectively. Two forces lie behind the downgrade:<\/p>\n 1. Australia\u2019s relative tariff treatment has narrowed. In April, Australia faced a 10% base tariff while many of our trade competitors in the US market confronted much higher \u201creciprocal\u201d rates. Many of those have now been cut, eroding the relative price advantage of Australian products in the US market.<\/p>\n 2. The global investment diversion is smaller. When investment contracts in the US<\/a> and in regions relatively hard-hit by US tariffs and retaliatory action, some investment is reallocated to more lightly hit economies.<\/p>\n Because the projected fall in investment in the US and other regions is now milder, the corresponding investment inflow to Australia weakens, with our forecast boost to Australian investment dropping from 2.9% to 2.1% in the short-run.<\/p>\n What should Canberra do?<\/p>\n For the moment, the tariff outcomes still tilt slightly in Australia\u2019s favour. That hardly argues for rushing into concessions in a bilateral \u201cdeal of the week\u201d with Washington, let alone making unilateral concessions outside of any bargaining framework. This is especially true when US policy continues to appear reactive, volatile and unreliable.<\/p>\n However, the source of Australia\u2019s edge is fragile. As the US pares back its own tariff threats against other countries, the relative price advantage Australia enjoys of being subject only to the 10% base rate will diminish, and so too will the investment diversion effect.<\/p>\n Hence, a further US retreat from high and differentiated tariffs may yet expose Australia to net economic harm. That point has not arrived, but it may be on the horizon as US tariff policy evolves.<\/p>\n James Giesecke<\/a> is professor, Centre of Policy Studies and the Impact Project, Victoria University<\/a> and Robert Waschik<\/a> is associate professor and deputy director, Centre of Policy Studies, Victoria University<\/a><\/p>\n This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"It\u2019s tariff season again, with the next deadline looming on Friday, August 1. Since the beginning of July,…\n","protected":false},"author":2,"featured_media":30380,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,7025,99,164,28749,9726,28750,4967,28751,28752,25696,28753],"class_list":["post-30379","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-block-2","tag-business","tag-economy","tag-liberation-day-tariffs","tag-the-conversation","tag-trump-tariff-deadline","tag-trump-tariffs","tag-us-reciprocal-tariffs","tag-us-australia-trade","tag-us-eu-trade-deal","tag-us-japan-trade-deal"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/30379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=30379"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/30379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/30380"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=30379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=30379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=30379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/07\/US-Tariffs-1.jpg\")
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\nThe jump in tariffs on all imported US goods will cost American consumers.<\/p>\n