US Tariffs Shake-Up: What It Means for Australian Investors

Big news out of the US. The Supreme Court has struck down President Trump’s emergency tariffs, cutting China’s rate from 18.8% to 5.8%. Steel and EV tariffs stay. Then, almost immediately, a new move: a 15% global surcharge under Section 122, set to run for up to 150 days unless Congress steps in.

Confused? You’re not alone. Markets were too.

Let’s break down what’s happening.

First, what’s actually going on?

In a 6 – 3 decision, the Supreme Court of the United States ruled the previous emergency tariffs were an overreach of executive power. That slashed China’s average tariff rate from 18.8% to 5.8%.

Within days, a new lever was pulled: Section 122 of the Trade Act, introducing a 15% global tariff for up to 150 days to address trade imbalances. After that, Congress must approve an extension or it expires.

Meanwhile:

• The US trade deficit hit record highs in 2025
• China and the EU flagged potential responses
• Markets swung sharply on each headline

If it feels like whiplash, that’s because it is.

Why markets are so jumpy

Tariffs are essentially taxes on imports. That can:

• Lift prices for consumers
• Squeeze company margins
• Shift demand between countries
• Change currency flows

We’ve seen a pattern before:

• Announcement: markets fall 2–5%
• Implementation: another 4–10% drop
• Pause or deal: rebound of 5–9%

Short-term volatility is real. But it doesn’t automatically mean long-term damage.

The Australian angle

Australia isn’t the direct target, but we’re deeply linked to global trade, especially China.

A few realities:

• Mining makes up around 40% of the ASX
• The ASX tends to loosely track the S&P 500
• The Aussie dollar often dips during trade shocks

If China slows, our miners feel it. If US reshoring ramps up, demand for certain minerals could rise. It cuts both ways.

Some estimates suggest:

• US inflation impact: around +0.6%
• US GDP drag: modest
• Australia GDP drag: potentially 0.1–0.3%, depending on how long tensions last

Not catastrophic. But not nothing either.

So what can investors do?

This isn’t about panic. It’s about positioning.

Here’s how many investors are thinking about it:

1. Consider Sector Trends
   Some investors monitor US domestic industrials and materials, which may be impacted by reshoring trends. Companies focused on internal US demand could be less exposed to cross-border friction.
2. Consider Sector Exposure
   Historically, sectors heavily reliant on Chinese consumer demand, like retail tech, have experienced volatility during periods of rising trade tensions.
3. Consider diversification and hedges
   Assets like gold or inflation-linked bonds can help cushion portfolios during inflation spikes or geopolitical stress. Diversification across regions matters more when global politics are in play. It can mean short-term swings, but it also spreads long-term risk.

None of this guarantees outcomes. Investing always comes with risk. But staying diversified and aligned to your goals is usually more effective than reacting to headlines.

The bigger power struggle

This isn’t just about tariffs. It’s also about who controls trade policy.

The Court reinforced that Congress holds tariff powers. Section 122 gives the White House short-term authority, but only temporarily.

That means the next 150 days matter. If Congress doesn’t extend the measure, it lapses. If it does, markets will reassess again.

Policy uncertainty is often what markets dislike most.

Possible scenarios

While no one has a crystal ball, investors are broadly weighing three paths:

Baseline (Scenario A)
Temporary tariffs. Negotiations. Volatility, but no full trade war.

Bull case
Deals struck. Tariffs scaled back. Relief rally.

Bear case
Escalation with China or the EU. Retaliation. Market pullback of 10% or more.

What matters most now

Trade tensions aren’t new. We saw it in 2018. We saw it again in 2025. Markets fell, then recovered.

The key question isn’t “Will there be volatility?” ……..There will

It’s, ‘How might a portfolio be structured to handle it?

A few small tweaks, like checking your diversification, reviewing sector exposure or adding defensive assets, can make a difference.

You don’t need to overhaul everything. Investors often focus on informed decision-making during periods of volatility.

 

Disclaimer : The opinions expressed in this article are those of the author and do not necessarily reflect the views of Superhero Securities Limited(ABN 96160456315)(AFSL No.430150 )or its affiliates.

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