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 It seems likely that some Australian businesses, especially in manufacturing and retail, may face increased financial strain due to US tariffs, potentially leading to more closures in 2025.

- The evidence leans toward US tariffs being a contributing factor, but not the primary cause, with other economic pressures like inflation and interest rates also playing a significant role.

- Research suggests the impact varies by sector, with steel, aluminium, and e-commerce businesses most vulnerable, though exact closure numbers are hard to predict due to global supply chain complexities.

 Introduction

The recent US tariffs, particularly those imposed by the Trump administration, have sparked concerns about their ripple effects on Australian businesses. These tariffs, targeting steel, aluminium, and goods from countries like China, Canada, and Mexico, aim to protect US industries but have global trade implications. For Australian businesses, the question is whether these disruptions will lead to more closures in 2025. Let’s break this down into the key areas of impact and what it means for businesses Down Under.

 Impact on Australian Businesses

US tariffs directly affect Australian exporters, especially those in the steel and aluminium sectors, with a 25% tariff making their products less competitive in the US market. Indirectly, businesses with supply chains linked to tariffed countries face higher costs and delays, impacting manufacturing and retail sectors. For instance, e-commerce retailers shipping to the US may see increased operational expenses due to the suspension of the ‘de minimis’ trade exemption.

 Vulnerable Sectors

The manufacturing sector, particularly steel and aluminium producers, is most at risk, as about 15% of these exports go to the US. Retail and e-commerce businesses, reliant on low-cost US shipments, also face challenges. Agricultural exporters, like those in beef and wine, could be affected by retaliatory tariffs or reduced demand, adding to the pressure.

 Economic Outlook and Closure Trends

Economic forecasts for 2025 suggest slow growth for Australia, with the Reserve Bank of Australia closely monitoring tariff impacts on inflation and interest rates. While business closures have been rising, it’s unclear how much is directly due to US tariffs, with other factors like high interest rates and inflation also contributing. The complexity of global supply chains makes precise predictions difficult, but sectors heavily reliant on the US market may see increased closures.

 Survey Note: Detailed Analysis of US Tariffs and Australian Business Closures in 2025

 Introduction and Context

The question of whether more Australian businesses will fold in 2025 due to US disruption, specifically the tariffs imposed by the Trump administration, requires a deep dive into economic and trade dynamics. As of March 18, 2025, the US has introduced significant tariffs, including a 25% levy on steel and aluminium imports and a 10% tariff on goods from China and Hong Kong, aiming to bolster domestic manufacturing and reduce trade deficits. These measures, effective from early 2025, have global repercussions, affecting Australian businesses through direct export challenges and indirect supply chain disruptions.

 Understanding US Tariffs and Their Global Impact

Tariffs are taxes on imported goods, intended to protect domestic industries by increasing the cost of foreign products. The Trump administration’s tariff strategy, announced in February 2025, includes:

- A 25% tariff on all steel and aluminium imports into the US, impacting Australian exporters.

- A 10% tariff on goods from China and Hong Kong, affecting supply chains.

- Suspension of the ‘de minimis’ trade exemption, previously allowing duty-free shipments under $800 to the US, hitting e-commerce retailers.

These tariffs have triggered retaliatory actions from affected countries, such as China imposing levies on US imports, potentially escalating into a global trade war. This uncertainty weighs on business conditions, as noted in the Reserve Bank of Australia’s February 2025 monetary policy statement ([RBA Outlook](https://www.rba.gov.au/publications/smp/2025/feb/outlook.html)), which highlights increased tariffs as a risk to global trade and supply chains.

 Direct and Indirect Effects on Australian Businesses

Australian businesses face both direct and indirect impacts from these tariffs:

- Direct Effects: Businesses exporting to the US, particularly in steel and aluminium, face a 25% tariff, making their products less competitive. For example, Australia exported 223,000 tonnes of steel and 83,000 tonnes of aluminium to the US last year, according to [Grant Thornton Australia](https://www.grantthornton.com.au/insights/client-alerts/the-impact-of-us-tariff-changes-on-australian-businesses/). This tariff increases costs, potentially reducing market share.

- Indirect Effects: Companies with supply chains linked to China and Hong Kong face higher input costs due to the 10% tariff. Retailers, especially e-commerce businesses, are hit by the ‘de minimis’ suspension, increasing shipping costs. The complexity of global supply chains, as discussed by [UNSW Business School](https://www.unsw.edu.au/newsroom/news/2025/03/how-us-tariffs-impact-australia-and-what-policymakers-can-do), makes it hard to predict the full impact, but increased costs and delays are evident.

 Sectors Most Vulnerable to Tariff Disruptions

Certain sectors are particularly at risk:

- Manufacturing: Steel and aluminium producers, accounting for about 15% of exports to the US, are directly affected. The Minerals Council of Australia ([MCA Response](https://minerals.org.au/resources/mca-response-to-us-tariffs-on-steel-and-aluminium/)) notes the potential for reduced exports and job losses. Other manufacturing sectors reliant on US inputs, like automotive, face higher production costs.

- Retail and E-commerce: Businesses shipping to the US, especially those using low-cost models, face increased operational expenses. [PWC Australia](https://www.pwc.com.au/tax/trade/what-do-Trump-tariffs-mean-for-Australian-businesses.html) highlights the impact on e-commerce due to the ‘de minimis’ change.

- Agriculture: Exporters of beef, wine, and other goods may face retaliatory tariffs or reduced demand if US trade tensions escalate, as noted in [The Guardian](https://www.theguardian.com/business/2025/feb/07/donald-trump-australia-trade-tariff-trade-war).

 Economic Forecasts and Business Closure Trends

Economic forecasts for 2025, as per [Vanguard](https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/vemo-australia.html), suggest gradual recovery with GDP growth expected at 1.6% to 1.75%, improving to 2.25% by 2026. However, the RBA ([RBA Outlook](https://www.rba.gov.au/publications/smp/2025/feb/outlook.html)) warns of risks from US tariffs, potentially disrupting trade and increasing inflation. Business closures have been rising, with a 36.2% increase in insolvencies from July 2023 to March 2024, as reported by the Australian Securities and Investments Commission ([ASIC Report](https://www.insurancebusinessmag.com/au/news/breaking-news/asic-reports-sharp-increase-in-business-failures-485789.aspx)), but linking these directly to US tariffs is challenging. Other factors, like high interest rates and inflation, also contribute, with small businesses particularly vulnerable, as per [ABC News](https://www.abc.net.au/news/2024-05-02/small-businesses-at-risk-of-collapse-as-big-business-cruise/103792082).

 Strategies for Australian Businesses to Survive and Thrive

To mitigate the impact, businesses can adopt several strategies:

- Diversification: Explore new markets in Asia, Europe, and South America, as suggested by [University of Melbourne](https://pursuit.unimelb.edu.au/articles/trump%2C-tariffs-and-the-implications-for-australian-supply-chains).

- Nearshoring: Shift supply chains to nearby countries to reduce tariff impacts, a strategy highlighted by [UNSW Business School](https://www.unsw.edu.au/newsroom/news/2025/03/how-australian-companies-can-prepare-for-us-tariffs).

- Flexible Contracting: Adjust contracts to respond quickly to trade changes, as recommended by Prof. Maggie Dong at UNSW.

- Financial Hedging: Use currency and commodity hedging to manage costs, as per [Grant Thornton Australia](https://www.grantthornton.com.au/insights/client-alerts/the-impact-of-us-tariff-changes-on-australian-businesses/).

- Innovation: Invest in R&D to create tariff-resistant products or improve efficiency, aligning with global trends noted in [JAGGAER](https://www.jaggaer.com/blog/the-impact-of-tariffs-on-american-manufacturing-a-balance-sheet).

 Indian Context and Relatable Examples

While the focus is on Australia, Indian readers can relate through parallels in global trade challenges. For instance, Indian steel exporters face similar tariff pressures from the US, with companies like Tata Steel navigating increased costs. Imagine Ramesh, a small business owner from a village in Punjab, exporting handicrafts to the US. If US tariffs rise, he might diversify to markets like the EU, mirroring strategies Australian businesses are adopting. This adaptability is crucial, as seen in Indian success stories like Reliance Industries, which expanded globally despite trade barriers, inspiring Australian firms to do the same.

 Conclusion: Navigating the New Trade Landscape

In conclusion, while US tariffs pose significant challenges, they are not the sole reason for potential business closures in Australia in 2025. The evidence suggests a complex interplay of factors, with manufacturing and retail sectors most at risk. By adopting strategic measures like market diversification and financial hedging, businesses can mitigate impacts. For Indian readers, the lesson is clear: resilience and adaptability are key in a volatile global trade environment, ensuring businesses thrive despite disruptions.

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 Key Citations

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- [What do Trump Tariffs mean for Australian Businesses PWC Australia](https://www.pwc.com.au/tax/trade/what-do-Trump-tariffs-mean-for-Australian-businesses.html)

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