Resources Minister Keith Pitt has ruled out slapping tariffs on Australian iron ore exports to China as a trade war worsens by the day.
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.
"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.
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.
