US President Donald Trump’s long-awaited ‘liberation day’ earlier this week caused a general sense of bewilderment around the world.
Clutching an oversized chart, Trump announced that ‘reciprocal’ tariffs would hit some 180 countries around the world. China got hit with a 34 per cent mark up. The European Union 20 per cent. India 27 per cent, Taiwan 32 per cent. Israel, perhaps surprisingly, got hit with a 17 per cent tariff.
Adding to the general confusion Cambodia, Vietnam and Thailand got hit with 49 per cent, 46 per cent and 37 per cent tariffs.
Australia came off fairly lightly, being hit with the ‘baseline’ 10 per cent tariff, with one bizarre carve out for Norfolk Island which got slapped with a 29 per cent tariff. The US said this was in response to the 58 per cent tariff (including currency manipulation and trade barriers) it faced from Norfolk Island. The uninhabited Antarctic Heard Island also got hit with a 10 per cent tariff, which might alarm penguins and seals looking to export fish to the US.
The US dollar dropped nearly three per cent after the changes were announced. At the time of writing, Apple’s share price has dropped nearly 10 per cent, Alphabet’s nearly four, Amazon’s nearly 10, too. Tesla, helmed by Trump acolyte and cheerleader Elon Musk, has proved surprisingly resilient, only falling six per cent.
Australia’s trade with the US is dominated by beef. Our bovine exports accounted for 15.1 per cent of total trade—worth AU$3.3 billion—with the US in 2023-24, according to the Department of Foreign Affairs and Trade. Meat, excluding beef, accounted for 6.9 per cent.
Now these ‘reciprocal tariffs’ might be little more than poor economics. In fact, the rates charged appear to simply reflect the US’ trade imbalance with each nation. Countries with which the US has a trade surplus, including Australia, got the “baseline” rate of 10 per cent. How this affects the import and export of services remains to be seen. The plot could get even thicker if countries start to issue reciprocal tariffs there.
“Nothing Good Comes From This” For Agencies
So what does it all mean for you, the great and good of Australia’s advertising, marketing and media industries? In short, none of it’s particularly good.
“There’s very little good news for agencies in Australia or around the world. Clearly, the US’ reputation is diminshed US and global growth will be negatively impacted. Inflation will rise and we’ll see a material disruption to global supply chains,” John Bastistich, former CMO, now non-executive director, told B&T.
Batistich said that the tariffs on China will likely have a bigger impact on Australia than our own 10 per cent baseline rate. It will slow demand for their exports, meaning they’ll have to find new markets. Higher interest rates in the US might also strengthen the US dollar versus our own. In short, it’s going to lead to more inflation of the Aussie dollar.
“It could mean that agencies’ largest cost, labour, there’ll be pressure on wage inflation. Those customers, particularly younger cohorts, renting or who have mortgages who have been hit most by inflation, they’re going to find pressure. There’s no question that inflation pressure could affect demand. There’s going to be tightened revenues for agencies and potentially pressure at the labour point,” the former Scentre Group and PepsiCo marketer said.
One senior media agency exec, who spoke to to B&T on condition of anonymity, said that it would take time for the effects to become immediately apparent.
“You read one article, it tells you one detail. You read another, it gives you a bit more. It’s like a sitcom. The general vibe is that we’re all a bit perplexed and let’s try to understand this better,” they said.
A senior industry consultant, also speaking on condition of anonymity, told us that the tariffs will only deepen the malaise that many have been feeling in adland.
“The industries getting hit are going to suffer job losses or further tightening. But I’m not sure it’s going to be that big as a percentage of the population. There’s already a shedding of jobs—certainly in our own industry. I think it’s going to exacerbate that situation and it’s never good having people unemployed because of the social impacts that has.”
American Brands Should Keep Their Heads Down
American brands dominate consumer minds—Coca-Cola, Apple, Tesla, Ford, Google, Microsoft, Meta to name but six. The advice for the custodians of these brands is simple: shut up.
“My advice would be not to dial-up any sort of nationalistic connections. Don’t remind people,” said the media agency exec, noting that they don’t work directly with any American brands, though it had an automotive client trying to figure out what would happen next.
The consultant said that they can’t see the Australian government getting into a “tit-for-tat” tariffs but warned American brands of a potential “social movement” against them.
“Why am I paying for Netflix? Why am I paying for Disney? Why am I paying for any of these things? Why Am I buying imported products?” they said.
However, they said McDonalds had done a “beautiful” job in localising its brand to Australia.
“If I was a US brand, though, I’d not say anything, fly under the radar but have contingency plans if there is a sudden movement against you, see sales dropping and start to hear voices in the marketplace, be willing to come out to show strong support and not just a vocal demonstration. Do something like cut margins, offer bonuses, make life easier for people in order to show your commitment to the Australian market,” they said.
“At the same time, talk about how many Australians you employ and the value you return. Or, I don’t know, maybe pay your taxes!”
Similarly Batistich said it was unlikely there would be a similar situation as with Canada.
“I don’t think Australians are that parochial. But I think there will be pressure on over American brands and retailers,” he said.
“The tactics against Australia are nowhere near [as aggressive] as what we saw in Canada but there’s a big shift. In parts of Europe, Tesla has had significant reductions of 30-40 per cent. The Tesla brand is collapsing. You know, one of my cars is a Tesla. I have buyer’s regret!”
Tesla, everyone agreed, is the worst-case scenario and is largely unimaginable for most American brands because of its inextricable link with Musk.
Australia Made & The Election
There is, however, potential opportunity and change on the horizon for Australian brands. In the most recent budget, Prime Minister Anthony Albanese announced a funnelling of $20 million into the Australia Made campaign.
Opposition leader Peter Dutton has said that Albanese “weak” and “missing in action” on his response to Trump’s tariffs. How this plays out in the polls, remains to be seen. But could the tariffs lead to an uptick in support for Aussie businesses.
“I can’t help but think it’ll dial-up the nationalism around Australia Made,” said the media agency exec.
“Is that a good thing? I think it is for Aussie makers. It’s the same thing Trump wants for American makers but I think it’s for the right reasons.”
The consultant said that Dutton’s own rhetoric may in fact have an unintended consequence for his electability.
“Dutton has positioned himself as a strong man in the shape of Trump. Now the enemy seems to be Trump,” they said.
“Albo said he’s not going to compromise any of these things. He suffers a perception problem because he’s sort of quietly spoken and he’s always very reasonable. Sometimes you have to be unreasonable in the face of chaos or maybe you need to be reasonable in the face of chaos so that people are calm. The last thing we need is for the Australian economy to start panicking. There are lots of countries that want our produce. We are the food bowl for the southern hemisphere,” they added.
What To Do Now
The skinny on what to do from the tariffs is this—don’t panic and be nimble.
Batistich said agency leaders and marketers are “so busy on today” and working through “all the noise”.
“Seldom do they focus on the external and have a part of one eye on the future. Getting ready for the future and the different scenarios as they build their FY26 plans has never been more important,” he said.
“They need to be planning for mild inflationary pressures, which will impact their biggest cost driver, labour. They need to bring their teams together, present a story of adaptation, resilience and think about the scenarios of what could go wrong and what could create opportunities.
“The conditions are perfect—why? Because they’re equal for everyone. It will be the agencies [who are] best ready, most adaptable to change but they’re going to have stay close to their customers, be ready for downsizing and automation if required.
There is one shining light, however.
“The best beef in Australia gets exported. If the American market is no longer viable for us, I’m hoping I can get a better cut of Australian beef at a reasonable price and not be paying over $100 a kilo for it,” said the consultant.
Perhaps that’ll keep the CFO off your back at your next long client lunch.
