The federal government has been seeking to gain an exemption to looming 25 per cent tariffs on steel and aluminium to the US, which are set to come into effect from March 12.
While Australia was granted an exemption from previous tariffs during President Donald Trump's first term, his trade adviser Peter Navarro said Australia had been "killing" the US aluminium market through its imports.
But Trade Minister Don Farrell rejected the claims, and said Australia had complied with obligations agreed to by previous governments.
"In the last 12 months, the caps that have been talked about we have not exceeded. The products that we've got into the United States have been at lower caps," he told reporters in Canberra on Thursday.
"One of the reasons that our exports of aluminium and steel to the United States have been reduced is because we have found other markets."
Senator Farrell said the government had been encouraging steel and aluminium manufacturers to seek alternative markets as part of diversification efforts.
The minister said Australian officials were still pushing for an exemption on the tariffs with the White House.
"It makes no sense for the Americans to apply a tariff to a country where they've got a deficit," he said.
"A part of that is the steel and aluminium that we've been talking about."
It comes after reports the US accepted more aluminium from Australia to help it meet a shortfall of the product after Russia was slapped with additional tariffs following its invasion of Ukraine, the Australian Financial Review reported.
Russia was one of the largest suppliers of aluminium to the US.
Opposition trade spokesman Kevin Hogan said Australia had not been taking advantage of the situation in the US.
"There's a precedent here ... as in a previous administration Trump again put tariffs on countries, we got an exemption. We've sent the precedent  there," he told Sky News.
"We're happy to work with the government to make sure we get the exemption this time because we have a good argument."
Australia was granted an exemption to tariffs in 2018 when Malcolm Turnbull was prime minister and Mr Trump was serving his first term in the White House.
But South Coast Labour Council secretary Arthur Rorris said the government needed to shift its approach on trade, arguing the domestic industry won't be saved by a tariff exemption.
"Trump is essentially throwing out the international rule book on trade," he told AAP.
"Kowtowing to President Trump is what we would consider a short-term fix, a band-aid.
"We don't need a band-aid, we need to face the reality the world has changed."
Mr Rorris's union includes workers from Australia's largest manufacturer and supplier of flat steel - BlueScope's Port Kembla Steelworks.
For many, the current situation echoes a 2015 steel crisis that almost led to the manufacturer's closure, risking thousands of jobs.
"I'm not suggesting we're about to lose our steel industry now," Mr Rorris said.
But if nothing changes and companies consider moving to the US due to certainty of demand and shareholder interests, the union leader said "that is not something we can afford to ignore".
"The steel industry is a massive part of the regional economy, but also a foundational industry for our national economy," he said.
Mr Rorris called on the federal government to introduce tougher anti-dumping provisions and ensure domestically produced steel was used within Australia.
"The Australian taxpayer is the biggest market for steel - not any private corporation or trading deal with any other country," Mr Rorris said.
"If you look at our needs as a nation there is more than enough there to keep our steelworks going."
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