There’s also a 5 percent import duty on all foreign cars. Trading partners that have deals with Canberra — like Korea and Japan — saw that removed but are still charged the luxury car tax.
The potential is there: Japan sold $8 billion worth of vehicles to Australia in 2024, with German only in fifth position at $2 billion.
While the EU would love to pave the way for more high-end German autos to be sold Down Under, the tax is domestic legislation and not formally part of the talks. Australia was rumored in 2023 to be willing to get rid of the tax, and Albanese hinted at it again late last year. That could be a sweetener for the EU to stomach a slightly higher beef quota.
The politics of it all
The EU is on a roll with new trade agreements: it has signed the Mercosur deal, closed talks with India and an Australian win is close. The streak serves von der Leyen’s geopolitical agenda for Europe to stand on its own two feet economically.
On the other side of the world, Albanese is in more dire need of a win. He’s under pressure over his response to the Bondi Beach terror attack in December. And even though Trump only hit Australia with a 10 percent tariff, the country needs strong alliances if it wants to weather both Chinese and American pressure.
The same is true for Europe, which sees the deal as underlining its cultural and historic ties with Australia, lifting an already-strong working relationship to the next level, as with Canada. And Australia is a key member of “the West” in the Indo-Pacific where Europe needs and wants to expand its attraction and influence.
Zoya Sheftalovich contributed to this report.