THE BIG $1s, page-191

In 1930, the U.S. passed the Smoot-Hawley Tariff Act, which:

• Raised tariffs on over 20,000 imported goods.

• Average tariff rates jumped to nearly 40%

NOW

• Only 10% on Australian exports

This benefits Australia because:

1. Relative Advantage: Aussie goods become more price-competitive in the U.S. market vs. other countries.

2. Trade Diversion: U.S. buyers may shift to Australian suppliers for minerals, agriculture, LNG, etc.

3. Export Growth: Increased demand for Australian exports can offset weak global demand.

4. Stronger Bilateral Ties: Australia could negotiate better trade deals or exemptions based on strategic alliances (Five Eyes, AUKUS, etc.).

In contrast to the 1930s Smoot-Hawley disaster, a limited U.S. tariff approach that exempts or reduces tariffs on Australia gives us a competitive edge in global trade, especially as other economies face steeper barriers.

Oz needs to act fast to take advantage

Stimulates Domestic Spending & Investment

• Cheaper loans = more borrowing for homes, cars, and business expansion.

• Boosts consumer spending, especially when confidence is low.

• Help startups and SMEs access capital at lower costs.

• Encourages property market activity, lifting construction and related jobs.

Lower rates devalue the Australian dollar relative to others.

A weaker AUD makes Australian exports cheaper (e.g. iron ore, LNG, agri-products).

Tourism and education become more attractive for foreigners.

It offsets global demand weakness or high tariffs elsewhere.

Quick rate cuts can fight off disinflation or deflation, especially if global prices are falling.
Lowering interest rates quickly gives Australia a head start on recovery, boosts exports, fights off deflation, and stimulates investment, especially as the world deals with trade shocks or slowing growth.


Short term pain tough.....IMO DYOR