US policy changes won’t have a large direct effect on the Australian economy but a global trade war can only be a drag on growthGet our breaking news email, free app or daily news podcastUS tariff policy has dominated headlines in recent weeks. In many respects, this shouldn’t come as a surprise – President Trump has been clear in his belief in tariffs as an effective policy tool. Indeed, the new US administration views tariffs as not only a means of raising tax revenue but also as a negotiating tool and a lever to ameliorate so-called trade imbalances. So far, we have seen both the threat of tariffs and the use of tariffs to achieve all these objectives.Despite all the headlines, Australia hasn’t really been subject to large changes in tariffs on its exports to the US. The US has, however, announced a 25% tariff on all steel and aluminium imports. If Australia is not successful in obtaining an exemption, Australian steel and aluminium exports to the US will be subject to new tariffs from 12 March. At an aggregate level, this won’t make much difference to Australia’s trade balance because the value of our exports of steel and aluminium to the US is only a very small proportion of our total exports. This is not to ignore the fact that, at a firm or industry level, a 25% tariff is significant.Sign up for Guardian Australia’s breaking news email