Mr Trump plans to increase tariffs on foreign steel from 25 to 50 per cent to "further secure the steel industry in the United States".
The move could impact 100,000 Australian jobs, with the sector exporting more than $414 million worth of products to the US in 2024.
Trade Minister Don Farrell is calling on the Trump administration to reverse the decision and drop all tariffs on Australian steel and aluminium.
"This will simply push up the price for consumers in the United States and do nothing for the prosperity of both of our nations," he told reporters on Saturday.
Mr Farrell said the government would work with the US but reiterate the view that tariffs were "the wrong course of action" and "don't do what President Trump claims they will do".
"We don't believe that retaliation is the right way to go here," he said.
"We're going to cooly and calmly argue our case for the removal of these tariffs."
Opposition trade spokesman Kevin Hogan said Mr Trump's call was concerning for Australian jobs.
"The Albanese government needs to double its efforts to protect our steel industry and local jobs for our steel workers," he said.
"This is why it is imperative that the Australian prime minister personally meets with President Trump ... to develop a personal rapport with the United States president and protect Australian industries."
The industry's peak body says it will continue to work with the federal government to push for an exemption from the Trump administration.
"The subsequent disruptions to global steel trade could see Australia become a dumping ground for imported steel," Australian Steel Institute chief executive Mark Cain said.
"And it could exacerbate the surge in imported low-priced steel that is damaging the industry."
It took Australia nine months of lobbying before it secured a tariff exemption during Mr Trump's first administration.
The US imported 289 product categories in 2024, costing $US147 billion ($A229 billion), with nearly two-thirds of those aluminium and one-third steel, according to Census Bureau data from the US International Trade Commission.
The 25 per cent tariffs on steel and aluminium were among the earliest implemented following Mr Trump's return to the White House in January and came into effect in March.
The latest tariff hike comes after a US federal court blocked the president's Liberation Day taxes on imported goods from going into effect.
Goods from Australia are subject to a 10 per cent baseline tariff, while all steel and aluminium imports to the US face 25 per cent tariffs before Mr Trump's latest announcement.
The New York-based Court of International Trade found the US president had overstepped his authority by imposing the tariffs.
The administration has launched an appeal, decrying "unelected judges" should not decide how to address a "national emergency".
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