Case study on Why U.S. Tariffs Threaten Australia's Iron Ore Dominance

lucasL

04-03

Even though China buys 80% of Australia's iron ore, U.S. tariffs would still cripple the industry because:

1. **Price Control**

- Iron ore trades in USD, with prices set in U.S. markets

- A 25% U.S. tariff could crash global prices 20-30% (2018 steel tariff precedent)

2. **China's Bargaining Power**

- With reduced U.S. demand, China would demand discounts

- 2020 coal boycott precedent: Australia had to sell to India at 25% discount

3. **Secondary Impacts**

- AUD would weaken as export revenue falls

- Mining giants (BHP, Rio Tinto) face profit squeezes

- Threat of U.S. pressuring allies to avoid Australian ore

**The Bottom Line**: The U.S. influences global commodity pricing power - even small tariffs create massive ripple effects. Australia's iron ore sector remains vulnerable despite China's dominance.

*(Key Data

Modified in.04-03

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