Quick answer
US tariffs on Australian goods are legally paid by the US importer of record when the goods clear the border, not by the Australian exporter. The exception is delivered duty paid (DDP) terms, where you as seller take on the duty. Since 24 July 2026 most Australian goods face a 12.5% tariff. Exporters feel it through buyer discount requests, DDP demands, smaller orders and longer payment terms, which all stretch the cash between making the order and being paid.
Key points
- The tariff is charged to the US importer of record at the border, unless you've agreed to sell on DDP terms, in which case it's yours.
- From 24 July 2026 a 12.5% Section 301 duty applies to most Australian goods, replacing the 10% Section 122 surcharge. They don't stack.
- Goods already hit by Section 232 tariffs are excluded from the 12.5%, and some commodities such as beef are on an exemption list. Check your tariff code.
- The tariff is applied to the product's origin, so goods you resell that were made elsewhere can face a different rate.
- Every concession you make (a discount, DDP, longer terms) has a cash cost you can calculate before you say yes.
You shipped the first order, the buyer paid on time, and then the email arrives: “Because of the tariffs, we need to revisit pricing.” Before you reply, it helps to know exactly who owes what, because most of the pressure in these conversations comes from blurry answers to that one question.
Who pays US tariffs on Australian goods?
The legal answer is simple. The tariff is a US import duty, and the importer of record pays it to US Customs and Border Protection when your goods clear the border. Under every Incoterms 2020 term except one, that’s your buyer or their broker.
The exception is DDP (delivered duty paid). Under DDP the seller is responsible for import clearance and duty, so the tariff becomes your cost. Anyone quoting DDP at the old landed price has quietly handed their margin to US Customs. The ICC publishes the Incoterms 2020 rules if you want the exact allocation of costs for each term.
| Your term | Who pays US import duty | What it means for you |
|---|---|---|
| FOB / FCA | Buyer | You’re out of the duty, but the buyer’s landed cost has risen |
| CIF / CIP | Buyer | Same, with you arranging freight and insurance |
| DAP | Buyer | You deliver to their door, they clear and pay duty |
| DDP | You | Duty is added to your cost of sale |
So the tariff itself isn’t your invoice. The commercial fallout is: a buyer whose landed cost jumped asks you to share it.
What is the tariff right now?
Rates and rules have changed more than once this year, and some articles online are out of date. As at late October 2026, reporting and the Australian Government’s export guide point to this:
- 12.5% on most Australian goods since 24 July 2026, under a Section 301 action by the US Trade Representative. Trade Minister Don Farrell called it an “extremely disappointing decision”.
- It replaced the 10% Section 122 temporary surcharge, which expired the same day. The two don’t stack.
- Goods already covered by Section 232 tariffs (steel, aluminium, timber, autos, semiconductors and similar) are excluded from the 12.5% but carry their own rates. Australian steel and aluminium have been reported as exempt from the highest metals surcharge.
- Listed commodities such as major beef categories sit on an exemption list. Lamb, mutton and goat meat have been reported as the most exposed.
- The tariff follows where a product was made, not who ships it. If you resell goods made in a third country, they can face that country’s rate, which may be far higher.
Check your product’s tariff code against the Go Global Toolkit and DFAT’s latest US tariffs page before quoting. A US customs broker can confirm the rate for your exact code. Rates and exemption lists have changed several times in 2026, so treat anything older than a few weeks with suspicion.
What does a 12.5% tariff do to a real order?
Illustrative only. An Australian food-ingredient exporter sells a $40,000 order to a US distributor on DAP terms, paid 30 days after delivery.
| Before the tariff | With a 12.5% tariff | |
|---|---|---|
| Invoice to buyer | $40,000 | $40,000 |
| Duty at the US border (rounded) | nil | about $5,000 |
| Buyer’s landed cost before their own costs | about $40,000 | about $45,000 |
| Buyer’s likely ask | none | 5–10% off, or DDP, or longer terms |
The tariff is calculated on the customs value US Customs assesses, which can differ a little from your invoice, so read the $5,000 as a ballpark. The buyer’s gap is real, and now you choose how much of it to absorb. Here’s what each concession costs you.
A 6% discount takes $2,400 off a $40,000 order. If your gross margin on it is around 25%, that’s close to a quarter of your gross profit on the order, gone.
Switching to DDP at the same sticker price means you pay the $5,000. That wipes out half of the same order’s gross margin, and you now need a US-capable broker, a bond arrangement and cash on hand when the goods land.
Stretching terms from 30 to 60 days doesn’t cost margin, but it keeps $40,000 of your cash outstanding for a month longer. If you run several orders in parallel, that’s a bigger hole than the discount.
Put in dollars like this, the concession that sounds gentlest on the phone is often the one that hurts the most.
How do I answer a buyer who wants a discount, DDP or longer terms?
Work through it in this order.
- Show the tariff as its own line. Quote the product price and, separately, “US import duty payable by the importer of record”. It keeps the duty out of the price negotiation, where it can only erode your margin.
- Confirm your tariff code and country of origin before conceding anything. If you’re on an exempt code, the whole conversation changes.
- Price each concession in dollars. Margin lost, cash held out, and extra cost to carry the gap. The cost of finance, if you need it, is an estimated total in dollars, not a rate.
- Trade, don’t give. A small discount for a larger or repeat order, a price review clause that tracks the tariff rate, or shared costs for a defined period are all easier to defend than an open-ended discount.
- Keep security on longer terms. Hold a deposit, set a credit limit, and for larger open-account sales look at trade credit insurance. The wider picture is in our guide on getting paid by overseas customers and the overseas buyer payment terms page.
If you ship small parcels straight to US consumers, note the exemption for low-value parcels was suspended earlier in 2026. Those parcels can now owe duty and fees, and Australia Post asks for a 10-digit tariff code, country of origin and value for every item.
Does the tariff change the GST position on my export?
Not directly. The ATO says exported goods are GST-free if they’re exported within 60 days of the earlier of receiving payment or issuing an invoice, and you hold evidence of export. US duty is a US border charge and doesn’t alter that test. What it can change is your timing: if a buyer delays a shipment while renegotiating, the 60-day clock may keep running from your invoice, so make sure you haven’t invoiced too early. Our page on GST-free exports and cash flow explains how this works with BAS refunds.
Ready to see where your own order stands? Check your options in 60 seconds — no credit check when you enquire.
What does it do to my working capital?
Tariffs lengthen the exporter’s cash cycle in three ways:
- Longer terms from buyers who’ve just taken a hit on landed cost.
- Smaller, more frequent orders while buyers wait to see if the rate moves, which means more setup cost per dollar sold.
- Production before certainty: you still buy materials and pay staff for an order the buyer may renegotiate once the goods are on the water.
For a business that sells on 30-day terms and moves to 60, the working capital needed to sustain the same volume rises by roughly a month of sales. Run your own numbers in the import cash timeline or read how export working capital is typically sized. For the bigger picture of a known US contract on delayed terms, pre-shipment finance is the product that funds making the order before the buyer pays.
Should I stay in the US market?
Some exporters will; some should look wider. A fair test is the order’s margin after the concession you’d realistically make and the cost of carrying the longer receivable. If that margin still beats your next-best market, stay. If not, Austrade’s Go Global Toolkit has market guidance and export grants listed, and the EMDG can help fund promotion elsewhere, although it reimburses you after you spend (see EMDG grants and cash flow).
Funding the gap while the tariff dust settles
Plenty of Australian exporters are in the same spot: good US customers, a squeezed margin and cash tied up longer than planned. We help business owners work out what funding fits an export order with a longer payment cycle, and we’d rather look at your actual numbers than guess.
Enquiring takes about 60 seconds, and your credit file isn’t touched just for asking. We don’t pass your details around to a pile of lenders; a real person who understands export orders and receivables reads your enquiry and phones you. Please fill the form in accurately (turnover, order size, terms you’re offering) so we can match the right option the first time.
Frequently asked questions
Who pays US tariffs on goods exported from Australia?
The importer of record in the US pays the tariff to US Customs and Border Protection when the goods clear. If you've sold on delivered duty paid terms, you've agreed to carry import duty, so the cost is yours. Under other Incoterms 2020 terms such as FOB, CIF or DAP, import charges sit with the buyer.
What is the current US tariff on Australian goods?
The Australian Government's export guide and trade press report a 12.5% tariff on most Australian goods from 24 July 2026, under a Section 301 action. It replaced a 10% temporary surcharge. Rates change quickly and vary by product, so confirm your tariff code on the Go Global Toolkit or with a licensed US customs broker before you quote.
Are any Australian goods exempt from the 12.5% tariff?
Goods already subject to Section 232 tariffs (such as steel, aluminium, timber, autos and semiconductors) are excluded from the 12.5%, and listed commodities including major beef categories are on an exemption list. Existing product exemptions carried over. Exemption lists are changed from time to time, so check the current list for your tariff code.
My US buyer wants a discount because of the tariff. Should I give it?
Work out the tariff in dollars for the order first. A buyer asking for the whole duty amount back is asking you to wear a cost the law puts on them, so a partial share, a smaller discount tied to volume or a price review at the next order is more common. Decide with the numbers, not the mood of the call.
Does the end of the US low-value parcel exemption affect me?
Yes if you ship small parcels direct to US consumers. The exemption for low-value parcels was suspended earlier in 2026, so those parcels can now be liable for duties and fees including the 12.5% on covered goods. Australia Post asks for a 10-digit tariff code, country of origin and value for each item.
Is the export still GST-free if the buyer asks for DDP?
The ATO says exported goods are GST-free if they're exported within 60 days of the earlier of receiving payment or issuing an invoice, with evidence of export held. Duty paid at the US border doesn't change that test, but check with your accountant how any duty you pay is treated in your books.
How can I protect cash flow if buyers want longer terms?
Quote with the tariff shown as a separate line, keep prepayment or a deposit where you can, cap the credit you extend to any one buyer, and consider trade credit insurance for larger open-account sales. If you still have to carry the gap, working capital sized to the order can bridge it.