His predecessor Matt Canavan has called for an iron ore levy as punishment for Chinese trade strikes against Australian wine, seafood, beef and barley.

Senator Canavan argues the penalty should be raised every time China takes further action against Australian exports.

Mr Pitt has quashed his National Party colleague's suggestion of an export tax.

"Backbenchers are entitled to their views, we work under the rules-based trading system, and Australia will meet its commitments," he told ABC radio on Monday.

Labor has eviscerated Senator Canavan's suggestion and demanded the prime minister rule it out completely.

Opposition frontbencher Madeleine King said there were no winners in trade wars.

"If this is the coalition's idea of trade diplomacy, it's little wonder the government has failed to deliver a credible path out its current trade woes with China," she said.

"Australian jobs and prosperity rely on open, rules-based trade, not retaliatory, tit-for-tat measures."

Ms King said Australia had benefited massively from the removal of trade barriers over recent decades, and imposing an export tax on iron ore would damage the world-leading industry.

Australia exported more than $100 billion worth of iron ore in the last financial year, with most of the commodity shipped to China.

The industry employs tens of thousands of Australian workers.

"Billions of dollars in trade and thousands of Australian jobs are at risk from these trade tensions," Ms King said.

China relies on importing iron ore as a vital ingredient for its ongoing infrastructure stimulus programs.

For the time being, it cannot source iron ore in sufficient quantity anywhere else, giving Australia some leverage in trade negotiations.

It is one of the few areas Australia holds the power in the two-way relationship.

China's trade aggression has been labelled a dumb tactic by a leading economist.

Deloitte Access Economics partner Chris Richardson said the trade war was providing a huge boost to the Australian economy, with market fears driving the iron ore price to a seven-year high.

The commodity is fetching $US150 per tonne, compared to just $US55 forecast in the October budget.

Liberal MP Dave Sharma said iron ore, coal and gas comprised the vast bulk of Australian exports to China.

"If your major exporters are commanding record high prices, well then not only are your exporters benefiting, but of course the government is as well, and government revenues are," he told Sky News.

Australian Associated Press