Australian aluminium is in the sights of the Trump administration. (ABC Newcastle: Anthony Scully)
In short:
Questions over a verbal trade deal cut with the US are re-emerging as the US places new tariffs on steel and aluminium.
Australia is seeking an exemption from the new US tariffs, with Donald Trump "considering" the request.
What's next?
The new tariffs are due to come into effect from March 12.
As negotiations continue to try and exempt Australia from sweeping new US tariffs on steel and aluminium, both industries are weighing up just what the future might hold.
The possibility of tariffs hasn't come as a huge surprise — Donald Trump ran his campaign on a platform of new tariffs.
But Australia has found itself in a very unusual situation.
On the one hand, US President Donald Trump has singled out Australia as one possible exemption from the 25 per cent tariffs he is placing on all steel and aluminium imports into the US.
On the other hand, Australia's aluminium exports are being singled out in official documents as a key reason for the tariffs.
It's left the Australian industry figures and diplomats working on the issue fairly perplexed as to what is coming next.
A verbal clause in a big trade deal
When the first Trump administration put new tariffs on steel and aluminium imports in 2018, Australia managed to negotiate its way out of it.
But the US says a verbal deal was struck — essentially agreeing that Australia would not use the advantage it gained from avoiding the tariffs to significantly increase its aluminium exports to the US.
At least some in the US are convinced that agreement has not been met.
One of Donald Trump's key trade advisers, Peter Navarro, told CNN that "Australia is just killing our aluminium market".
According to US trade data, Australia's aluminium exports jumped in 2019, and have stayed comparatively high.
And it was noticed by the Trump administration while it was still in office, with the president reportedly raising the issue in a meeting with Scott Morrison in 2019.
Australian aluminium is clearly an issue for at least some figures in Donald Trump's administration.
For example, Peter Navarro was a presence in the first Trump administration, and is involved in the second Trump team too.
Peter Navarro does not believe that Australia should get an exemption. (AP: Jose Luis Magana)
That could prove a headache in negotiating any tariff deal.
A small player in a big market
But for all the attention Australian aluminium is getting, it is a surprisingly small slice of the American aluminium market.
About 10 per cent of Australia's aluminium imports are bound for the US, with the vast bulk heading to Japan and South Korea.
Australian aluminium makes up just 2.5 per cent of the total aluminium imported into the US, which is dominated by imports from Canada.
Trump aide says Australia 'killing aluminium market'
Photo shows An aerial shot of an aluminium smelting plant, with the coastline on the horizon
That has led some to seriously question the suggestion that Australian aluminium is somehow 'killing' the American sector.
Paul Myler, a former deputy ambassador to the United States and now chief executive of advisory firm Strat Q, said it seems like an overreach.
"If Australia can destroy the US aluminium industry, then they must really be on their knees, because we're not that big a player," he said.
As for the spike in aluminium exports after 2018, some have noted that doubling imports from one per cent to two per cent still leaves Australia as a very small player in the aluminium market.
And it has been pointed out that other factors have been disrupting the flow of aluminium around the world.
For example, Australia has stopped exporting alumina (refined bauxite, that is then smelted into aluminium) to Russia, which is one of the world's major aluminium producers.
The United States has also stopped importing aluminium from Russia, creating a gap in the market for other countries to fill.
Consequences on both sides
Both the government and industry have been preparing for the possibility of tariffs since Donald Trump won the US election last November.
So the tariff announcement did not come as a huge surprise, and the steel and aluminium sectors are preparing for the possibility tariffs could become a reality.
The tariffs would have some significant consequences on both sides of the Pacific.
Finding a new market for the 10 per cent of Australian aluminium currently bound for the US might be challenging, but would be made more complicated as Australia competes with other exporters looking for new markets.
But it has also been pointed out by some industry figures that the United States will need to keep importing aluminium, and American businesses will be left paying the 25 per cent premium.
Smelters can take a decade to build, and the US simply doesn't have the domestic capacity to produce the aluminium that American industry needs.
Given how quickly the situation has changed in the days since the initial tariff announcement, few are willing to predict exactly how it will play out.