US tariffs, initially implemented in April 2025, have continued to affect Australian businesses, impacting sectors such as fashion and toys through reduced demand, altered operational strategies, and supply chain challenges. The legality of these global tariffs is currently under review by the US Supreme Court, with a ruling anticipated. Australian businesses and the government are navigating these trade conditions, which include the 2025 removal of the 'de minimis' exemption and the Australian government's support initiatives for exporters.
Background and Legal Review
US tariffs, introduced in April 2025, have been cited as a contributing factor to supply chain and pricing challenges for Australian companies. The US Supreme Court is expected to issue a ruling on the legality of these tariffs. Trade expert Felicity Deane, a professor at QUT, indicated that a determination of illegality by the court could obligate the US to reimburse companies that have paid the tariffs.
Impacts on Australian Businesses
Australian businesses, including those in fashion and toy manufacturing, have been reassessing their operational strategies within the United States. Reports from some businesses indicate ongoing economic uncertainty.
- The Nashie: Tom Wilson, co-founder of the Australian sun protection brand The Nashie, reported paying tariffs on garments sold in the US, with higher rates applicable due to manufacturing in China. Mr. Wilson attributed a reduction in demand in the US market to consumer apprehension regarding tariffs, a trend consistent with core US data indicating declining consumer confidence.
- HeyDoodle: Beatrice Toh, founder of the Australian toy brand HeyDoodle, reported reduced sales. She noted that a primary impact on her business was a decrease in customer confidence, leading some wholesale stockists to close due to reduced foot traffic and tighter margins.
Both Mr. Wilson and Ms. Toh have stated their intentions to continue operating within the evolving trade environment. Mr. Wilson characterized the tariff situation as unpredictable, suggesting that while a consistent high tariff can be managed by passing costs to consumers, unpredictability hinders business operations.
De Minimis Exemption Removal
In 2025, a significant change for Australian exporters was the removal of the 'de minimis' exemption, which previously waived taxes on goods of smaller value. This policy change affected online retail and led to postal carriers, including Australia Post, temporarily suspending most shipping services to the US.
- Apero: Fashion brand Apero reported that the removal of this exemption impacted their operations, as up to 30 percent of their revenue previously originated from the US market. Laz Smith, co-founder of Apero, stated that the company had not received significant support from Austrade or the Australian government in navigating this period of uncertainty.
Government and Industry Response
In April 2025, the Australian government pledged $50 million to support exporters, with further details on the allocation of these funds emerging later that year. This funding, channeled through the Accessing New Markets Initiative (ANMI), aimed to connect national industry bodies with Austrade. Initiatives under ANMI have included support for fresh produce growers and fine food brands.
Some Australian companies have expressed dissatisfaction with their interactions with Austrade. Mr. Wilson of The Nashie stated his perception that the government viewed this as a past issue and that businesses were managing independently. Trade Minister Don Farrell stated that ANMI delivered five business missions within the first 100 days of the government's re-election in May and that further details on remaining ANMI programs would be announced.
Conversely, the swimwear brand Bond Eye found support through the fashion industry's lobby group. Founder Steve Philpott reported that the company absorbed costs and maintained loyalty to their factories and supply chain partnerships. The Australian government and Austrade's response to future trade disruptions and potential tariff directives from the US White House remains a focus for observation.
Future Outlook
Professor Deane observed that while 2025 presented an unusual year for global trade, the US tariff situation appeared to be stabilizing. Recent actions by the US president have included an offer for Italian pasta brands and a delay in taxes on imported furniture. Professor Deane suggested that inflation might also have influenced tariff decisions. Her advice for Australian exporters for 2025 included awaiting the US Supreme Court's decision on tariffs and maintaining adaptability.