2 weeks Ago By Kat Wong and Jacob Shteyman
US tariffs have wreaked havoc on financial markets but could force the Reserve Bank of Australia to deliver more mortgage relief sooner. Login or signup to continue reading ANZ Bank - until recently the most hawkish of the big four banks - on Friday upped its interest rate cut predictions due to the carnage US President Donald Trump's tariffs are expected to inflict on the global economy. After previously predicting just one more rate cut, the bank's economists now believe the RBA will deliver three more 25-basis point cuts by August.
That would bring the cash rate down to 3.35 per cent, saving the average mortgage holder an additional $269 a month in repayments. ANZ thinks a mega 50-basis point cut at the central bank board's next meeting in May is on the cards, as insurance against an expected collapse in business and consumer confidence.
"On the information we have to hand, the market reaction and past RBA responses to global shocks, more aggressive RBA easing now seems more likely than not," ANZ's economics team said in a research report. The move comes after US Commerce Secretary Howard Lutnick trashed Australia's biosecurity regime, claiming it was being used to "block" American markets as he attempted to justify Mr Trump's executive order pinning 10 per cent tariffs on Australian imports. The United States has long taken issue with Australia's ban on uncooked American beef imports, which has been in place since a 2003 mad cow disease outbreak.
Australia also does not allow fresh pork imports, uncooked poultry or pears and apples from the US to prevent pests and bacteria. Mr Lutnick decried these restrictions. "This is nonsense.
This is all nonsense," he told CNN. "What happens is, they block our markets. "When we open those markets, our volumes grow, our farmers will thrive and the price of groceries will come down.
" There was some validity to American accusations Australia used "beyond-the-border" tariffs, Australian National University politics lecturer Jill Sheppard said. "Rather than imposing financial tariffs, we use the biosecurity regime as a form of trade policy," she told AAP. "Everyone involved in primary industries knows it.
Everyone that watches politics knows it." Prime Minister Anthony Albanese and Opposition Leader Peter Dutton have taken a bipartisan position on the issue, with both promising not to undermine Australia's biosecurity in US tariff negotiations. US and world stock markets have tanked amid fears the tariffs could spark a global recession.
Wall Street marked its biggest one-day percentage loss - nearly four per cent - since mid-2020 when the COVID pandemic was in play. The Australian stock market followed suit, falling 1.8 per cent by Friday afternoon following a 0.
9 per cent drop the day prior. Tariffs are expected to directly reduce Australia's GDP by about 0.2 per cent, but the indirect impact of the measures on global trade could lead to a bigger hit to the domestic economy.
"What we have seen overnight is a fall in the stock market globally," Mr Albanese told ABC Radio on Friday. "There is concern that this will lead to lower economic growth right around the world, and of course, as a trading nation, that will have an impact on us." Negotiations with the US administration continue, but Mr Dutton believes his government could bring more to the table if elected.
"When we were in government last, we negotiated for Australia to be exempt and this prime minister has failed that test," he told reporters in Sydney. No country has successfully secured an exemption from US tariffs. With a federal election on the horizon, the tariffs could provide leaders an opportunity to reinvigorate their campaigns.
"It's an opportunity for both to show strength," said Headline Advisory director Andrew Carswell, who previously served as a media adviser to former Liberal prime minister Scott Morrison. Australian Associated Press Daily Today's top stories curated by our news team. Also includes evening update.
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