Australia's gross domestic product will be impacted negatively by America's 25 per cent tariffs on steel and aluminium, but the central bank assures it will be "relatively small".
"We're not as exposed as other countries," assistant governor Sarah Hunter told a parliamentary inquiry on Friday.
"Tariffs can have really dislocating impacts in the short term, and that's what can generate these big downturns in their economy, and have implications both for GDP and for inflation.
"Here, our trade patterns are different."
Australia has relatively low tariffs and trade barriers, and in the past the exchange rate has been a "substantial" buffer. This means the impact of the US tariffs, which come into effect in March, depends on how it plays out with other countries.
The Reserve Bank is expecting a further escalation with China but if Beijing can no longer export to the US, they might choose to engage in cheaper trade elsewhere and Australia could benefit.
The impact of the tariffs on inflation is unclear, but the central bank's governor warned uncertainties and unexpected strength plagued the economic outlook.Â
Michele Bullock said inflation had slowed more than expected, convincing the board it was appropriate to slightly ease monetary policy for the first time in four years.
"We can be satisfied with the progress made so far, though the job is definitely not done," she said.
"The economic outlook remains uncertain and this is especially so the further we look into the future."
Data released by the Australian Bureau of Statistics on Tuesday shows the labour market remains remarkably resilient, with an extra 44,000 jobs added to the economy in January.
While strong employment growth is good news for jobseekers, it leads to uncertainties over how much capacity there is in the labour market.
"We are alert to the possibility that it is signalling a bit more strength in the economy, which could delay or derail the disinflation process," Ms Bullock said.
Questions have also been raised over the lag between changes to monetary policy and their impact on the economy.
The RBA's board recognised Australian households, particularly those with mortgages, have been particularly burdened and noted high inflation had permanently increased prices.
"This has hurt everyone, but particularly those on lower incomes and more vulnerable," Ms Bullock said.
"We've made good progress on inflation, however, and the board needs to be confident that it is returning to change sustainably."
Some economists argue the board was too premature in cutting rates, such as University of NSW professor Richard Holden who says underlying inflation is still too high.
But RBA deputy governor Andrew Hauser said the decision to cut was not a "slam dunk", as the market had expected.
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