Canberra breaks with Washington on India and tariffs
A 50% tariff shock from Washington and a swipe about a “dead economy” would usually spook partners. Not Australia. Trade Minister Don Farrell has brushed aside the rhetoric and the duties, calling India a market of “fantastic opportunities” and making it clear Canberra won’t be following the White House down the protectionist path.
Farrell’s message is blunt: Australia opposes blanket tariffs, whether they hit Australian exporters or India’s. That lines up with Foreign Minister Penny Wong’s earlier criticism of sweeping trade barriers, and with Canberra’s long-standing free-trade streak. The split matters. It signals that one close U.S. ally is choosing engagement with New Delhi at the very moment Washington is tightening the screws with Donald Trump tariffs on a wide set of Indian imports.
In a press briefing, Farrell said Australia wants deeper economic ties with India and is backing major projects and trade channels to make that happen. He flagged support for Adani’s Queensland mining operations, endorsed uranium exports to India under the existing civil nuclear framework, and put critical minerals right at the center of the pitch. His framing was simple: two large democracies should be trading more, investing more, and building supply chains that actually work in both directions.
The timing is no accident. U.S.-India trade relations are tense again—echoes of earlier tariff fights that saw New Delhi lose duty-free access for some exports and respond with retaliatory duties of its own. Australia seems determined to avoid that loop. Instead, it’s leaning into a strategy that treats India not as a rival or a risk, but as a growth partner in energy, technology, education, and advanced manufacturing.
Minerals, energy and a bigger bet on India
Farrell’s most concrete offer is the minerals pitch. Australia sits on some of the world’s richest deposits of lithium, nickel, cobalt, and rare earths—materials you need for EV batteries, wind turbines, smartphones, and the grid gear that makes the net-zero transition work. He called Australia “lucky” for having those reserves and said the aim is to share that advantage with India by building reliable, long-term supply lines.
That dovetails with the partnership both countries have been stitching together since 2022 under their critical minerals agenda. India wants to scale EVs, solar manufacturing, and grid storage at speed; Australia wants to move up the value chain from simply digging minerals out of the ground to processing and refining. Put those together and you get joint ventures, offtake deals, and processing facilities that cut dependence on single-country suppliers and lower the risk of sudden export bans or price spikes.
Energy is the other pillar, and it’s broader than coal. Farrell’s nod to uranium draws on a civil nuclear cooperation deal that lets Australia sell uranium to India for peaceful use. Actual shipments have been modest so far, but Canberra’s signal is clear: if India wants nuclear in its clean-energy mix, Australia will help feed it—safely and under safeguards. On coal, the politics are trickier. Adani’s Carmichael mine in Queensland remains controversial at home, but India’s heavy industry and power sector still rely on imported thermal and coking coal as they transition. Canberra is threading that needle by backing projects while talking up emissions cuts and cleaner technologies.
Trade architecture is already in place to push more goods and services both ways. The interim Economic Cooperation and Trade Agreement (ECTA) took effect in late 2022, cutting tariffs across a slate of products—from Australian coal, wool, and wine to Indian textiles and pharmaceuticals. A full Comprehensive Economic Cooperation Agreement (CECA) is meant to follow, with both sides negotiating deeper cuts, easier services access, and clearer rules for digital trade and investment. The two-way trade figure has climbed past A$45 billion, and officials on both sides want that number to move much higher over the decade.
People ties are doing a lot of the heavy lifting. A large, fast-growing Indian diaspora in Australia acts as a bridge for business and investment. Universities are getting more involved too. Australian institutions are setting up in India’s GIFT City and signing research partnerships in fields like clean energy and critical minerals processing. That ecosystem—students, researchers, founders, and mid-market exporters—often moves faster than treaties.
Zoom out and the strategy looks like this: build resilient supply chains with India, lock in minerals and energy partnerships that support the net-zero shift, and keep markets open even as big economies pull up drawbridges. It’s also a Quad story in the background. Australia and India sit alongside the U.S. and Japan in a security grouping that has expanded into economic cooperation—from semiconductors to maritime logistics. For Canberra, consistency between its security ties and trade policy means showing up as a reliable partner to New Delhi, not just a fair-weather friend.
None of this is risk-free. If tariff tensions between Washington and New Delhi escalate, companies could face higher costs, sudden rule changes, or forced supply-chain pivots. Environmental and community concerns could slow new mining or processing projects in Australia. And while India’s growth has been strong, bottlenecks—land, logistics, and regulatory complexity—still trip up foreign investors. But Farrell’s bet is that the upside is bigger than the friction, and that Australia gains by being early, steady, and practical.
Watch for a few markers in the months ahead:
- Progress on the Australia–India CECA, including deeper cuts on goods and clearer rules for services and digital trade.
- Announcements on critical minerals offtake deals, refinery projects, or joint processing facilities tied to EVs and grid storage.
- Movement on uranium export licensing and safeguards implementation for Indian utilities.
- Education and research tie-ups expanding beyond pilot programs into permanent campuses and labs.
- Any Indian tariff response to U.S. measures—and whether Australia and India move to insulate their own trade from the fallout.
Farrell’s core message keeps it simple: Australia wants to sell what India needs for growth and decarbonization—and to buy more of what India makes. That’s not just a counter to a sharp line about a “dead economy.” It’s a plan to turn a geopolitical argument into a set of deals, factories, and shipping contracts that can outlast this news cycle.