Trade Minister Simon Birmingham has warned Australian consumers will end up paying for Donald Trump's decision to slap tariffs on $278 billion worth of Chinese goods.
The US president has announced a new round of tariffs against China to take effect from Monday, starting at 10 per cent, and rising to 25 per cent at the beginning of next year.
He threatened to drive the trade stake even deeper if Beijing retaliates.
Accounting giant KPMG estimates the escalation in the US-China trade war could cost the Australian economy at least $36 billion over the next decade, depriving the national economy of 0.3 per cent growth.
The global firm predicts Australia will be far more heavily bruised than the European Union or Japan.
As a small, open economy anything that negatively influences our trading with other countries is a bad outcome for Australia," KPMG Australia chief economist Brendan Rynne told AAP on Tuesday.
"The real concern remains that this trade war develops into something that brings in other countries who adopt protectionist trade measures to ward off the excess goods that get built up in China and the US."
Speaking to ABC radio minutes before the announcement was made, Senator Birmingham said "disruptive" trade practices hurt economies.
"Tariffs ultimately result in consumers paying more and disruptive trade practices ultimately hurt economies rather than help them," he said.
Senator Birmingham said Australia was always concerned when people flouted the rules-based order of international trade.
The federal government is focused on pursuing free trade deals and guarding against other nations dumping low-value goods on Australian soil.
"We have continued to consistently urge parties not to pursue distorting subsidies and not to pursue unilateral tariff actions," Senator Birmingham said.
Labor frontbencher Brendan O'Connor fears Australia will be collateral damage in the global trade war.
"There will be ramifications - the extent and nature of which we don't know yet - but there'll be some impact on Australia," Mr O'Connor told Sky News.
"The retaliation is going to ripple through this region, without a shadow of a doubt."
Australian Associated Press
