Lets not talk hypothetical steel tariffs on Australia, when we...

Lets not talk hypothetical steel tariffs on Australia, when we can take a real life example of tariffs on most products of the two biggest economies of the world.
What happens when you spend more on you phones, your tv, your fridge, your soy beans, your car? Let's say its an extra $100 a month. This is an extra $100 that you lose for no reason other than the nature of a trade war. Thats a $100 that won't be going into retail or restaurants. Then multiply this by every person in the two biggest economies in the world. Demand for goods and services decline in those economies. These economies would have decreased demand for products from their trading partners such as wagyu beef, A2 milk powder and Australian wine (and so much more).
But Australia is just one of the trading partners of the two power houses, all other trading partners would be affected. Most of those trading partners are trading partners of Australia and their demand for Australian product would decline.

Economics is a complex integrated web that goes far beyond "interest rate fluctuations". The above is a gross simplification of what actually happens but hopefully gives a high level summary of what actually happens when tariffs are imposed, especially on the two biggest economies in the world.