Will Aussie HVAC&R be affected by the chaos of Donald Trump?

Whatever your thoughts on him politically and personally, there’s no denying that US President Donald Trump is a human headline. Since returning to office in January 2025, Trump and his allies have dominated the news cycle with sweeping tariffs on imports, widespread and aggressive cutbacks on US government jobs, and a few scandals for good measure. 

By April 2, 2025 – dubbed “Liberation Day” by Trump – the administration had imposed: 

• A baseline of 10% tariffs on all imports, including those from Australia 
• Higher tariffs on countries deemed to have “mistreated” the USA, including 34% for China (with the possibility of further huge increases), 20% for the European Union, and 24% for Japan 
• 25% tariffs on cars and car parts 
• 25% tariffs on aluminium and steel imports, including metals produced in Australia. 

The situation is unpredictable and evolving rapidly. After the initial announcement, Trump raised the tariffs on China several times over, reaching a staggering 145%. He has since said those tariffs will be “substantially” reduced – and has put a pause on the tariffs on many other countries – but the uncertainty remains. Global markets have been on a roller coaster ride since the announcements.

But while tariffs were stealing global headlines, the US Environmental Protection Agency (EPA) announced something potentially more consequential on March 12. In what it described as the “biggest deregulatory action in US history”, the EPA announced 31 “actions” that would weaken protections around carbon emissions, air and water quality.  

In this article, we’ll look at both the economic and environmental ramifications of the Trumpian revolution, and how these could potentially flow on to affect the Australian HVAC&R industry. 

Insular America 

Tariffs are considered a protectionist economic policy. They aim to stimulate local manufacturing and discourage American businesses from looking elsewhere for goods and raw materials. Trump often describes them as a way to “make America great again” and get back at trade partners who he says have been exploiting his country.  

The problem is that the USA simply doesn’t have the capacity to manufacture everything it consumes. Even if these protectionist policies are successful at encouraging companies to bring manufacturing back to the USA, it will take years to establish the facilities and infrastructure to do this successfully at scale. And higher US labour costs mean that, even taking the tariffs into account, it will still likely be cheaper to import many goods and materials from abroad.  

Given that these tariffs are likely to increase out-of-pocket costs for consumers, several political commentators have questioned whether Trump actually understands how tariffs work. Some theorists even argue that implementing tariffs is a socialist policy, as it increases tax revenue and stifles free trade.  

Whether or not tariffs are a good idea, it’s clear that the USA is committed to going down this path for at least the next four years. So how will this policy affect us in Australia? 

Flow-on effects 

Mark Padwick is the treasurer and former president of the Air-Conditioning & Refrigeration Equipment Manufacturers Association of Australia (AREMA). He notes that, as it stands, the direct effects of US tariffs on the Australian HVAC&R sector will be minimal. 

“The current tariff changes in the USA reflect the import of materials into the USA,” Padwick says. “Little of our industry is affected by this, as we import far more products than we currently export, and the US is not a large market for these exports. 

“It is our understanding that the buyers in the USA will manage the cost increases by pushing them onto their domestic consumers for those products they cannot source locally.”  

“Each of those organisations made it clear that the tariffs are by far the most profound impact on the RAC industry in their countries for a generation,” he says.

Home ground advantage

Damien Walsh is the Chief Customer Officer at Temperzone, an HVAC&R manufacturer that sells primarily to the Australian, New Zealand, and Asia-Pacific markets, with manufacturing facilities located in Sydney, Auckland and Hamilton. 

Walsh points out that, while nobody can use a “crystal ball” to forecast the effects of radical policy shifts like Trump’s widespread implementation of tariffs, he doesn’t see the news having an immediate or profound impact on Australian HVAC&R manufacturers.

“From a local perspective, with Australia and New Zealand being our principal market, we don’t see too much changing at the moment,” Walsh says.

However, he notes that companies that rely more heavily on international trade are likely to be affected, with economic concerns running deeper than just the tariffs themselves.

“If you’re a global company and you’ve had a large part of your global market impacted, then that will have a huge effect,” he says.

“What’s more of a factor is what happens with the economy.”

Indeed, the Australian dollar has fallen around 12% against the euro in recent months. In the days after Liberation Day, its value dipped below 60 US cents. A weaker Australian dollar would increase the price of imports, including some HVAC&R components that can’t presently be manufactured locally.

Walsh identifies some similarities between Trump’s trade war and the last event to cause major disruption to global markets: the COVID-19 pandemic. He says the pandemic drove home the value of local manufacturing.

“We noticed more interest from clients buying locally during COVID,” Walsh says. “Having continuity and stability with local products and expertise became more important to clients as global supply chains were disrupted.

“People should be considering buying Australian-made products anyway,” he adds. “But the most important factor in encouraging people to buy locally was the shift in the mindset around supply chain disruption during COVID.”

While the pandemic caused major delays in physically transporting goods, Walsh doesn’t expect Trump’s trade war to have the same effect.

“What is happening is not interrupting supply chains,” he says.

Uncertain times 

Despite Australia’s relatively strong position in all of this, uncertainty is insidious. Padwick notes that disruptions in the USA could have flow-on effects to Australia, with uncertainty playing a key role.

“We may see reductions in freight as product movement in and out of the USA reduces,” Padwick says. “We might also see changes in our market should tariffs be imposed on other sections of our economy, which could result in changed market conditions for air conditioning and refrigeration equipment.” 

Padwick acknowledges that there is concern about this market uncertainty within the Australian HVAC&R manufacturing sector. However, he is optimistic that things will settle down both in Australia and abroad. 

“There are a broad range of market and policy/regulatory issues at play,” Padwick says. “The market is dynamic and likely entering a period of change. Hopefully the international trade settings become clear and Australian policy initiatives become more certain post-election, which will provide market stability.” 

Slashing and burning 

Tariffs are only part of the Trump effect. Another move that could have longer-term impacts is a widespread rollback of environmental regulations, which the EPA says will “unleash American energy”. While these rollbacks have not yet been finalised, it seems deregulation will advantage fossil fuel companies while weakening restrictions on carbon emissions and pollution. And if we’re to believe the administration’s rhetoric, there are many more environmental rollbacks to come. 

“When I think of ASBEC’s 20-year history, there also have been times when there hasn’t been any sort of government leadership around net zero. Nevertheless, progress still occurs because there are productivity arguments, health arguments, economic arguments for positive and sustainable change in the built environment … regardless of emissions reduction commitments. Those commitments definitely help though!”

Smart money 

While Scotland acknowledges the possibility that Trump will embolden climate deniers to abandon net zero goals, she doesn’t expect that to be the case in the built environment sector in Australia or elsewhere. 

“Regardless of the what the USA does during one term of government to blow up whatever progress they’ve made, there’s still hope and action happening across the globe. 

“Europe, the UK, and even China, are making great progress on sustainability because it’s good for business and creates new revenue streams. Even the principles of circularity make economic sense – for example, if this crisis drives up the cost of building materials, we need to focus on making the most of our resources, reducing waste, changing our behaviours and construction practices.”  Amid all the uncertainty, one thing seems clear: the next four years will be a roller coaster, and Australia will need to brace itself for the unexpected.

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This article appears on the cover of the April–May 2025 issue of HVAC&R News.

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