Any import tariffs imposed by an incoming Trump administration could have a negative impact on Australia, Treasurer Jim Chalmers in a speech on Nov. 11 at the Australian Institute of International Affairs (AIIA).
The incoming president has said he intends to place tariffs of 10 percent on all imported goods, with up to 60 percent and 100 percent imposed on imports from China and Mexico respectively.
The electoral victory of President-elect Trump has sent world leaders and media outlets into a tailspin about the impacts of possible changes to trade rules.
In Australia, the government said it had planned for the possibility with the long-term outcomes favouring the country.
“Of course we expect the incoming U.S. administration to bring a different suite of policies, and we are confident in our ability to navigate that change, as partners,” Chalmers said.
Behind the scenes, the Australian government had already begun building personal links to probable key members of the new president’s team. Chalmers said he met Trump’s economic adviser Scott Bessent—a potential Treasury Secretary in the administration.
Foreign Minister Penny Wong also spoke to former Secretary of State Mike Pompeo during her visit to Washington in October before the president-elect announced Pompeo would not be welcomed into the new administration as secretary of defence.
Treasury Says Australian Economy Flexible Enough
Australia’s Treasury modelling showed that while there would be a “reduction in output and additional price pressures,” the nature of the country’s economy would leave it better off compared to other nations.“The timing of this, and the responses and ramifications that might follow—what economists call second-round effects—are difficult to predict, but we wouldn’t be immune from escalating trade tensions that might ensue.
However, Australia’s flexible exchange rate and independent central bank will mitigate the impacts, along with the fact that the relationship between the two countries “under presidents and prime ministers from all sides is strong and enduring” and “built on shared values and interests and deep engagement not partisan or even ideological ties.”
The treasurer also backed Australia’s Ambassador to the United States Kevin Rudd whose position is being questioned in light of his previous uncomplimentary remarks about President-elect Trump.
“Prior to the U.S. election, Ambassador Rudd helped many of us build and deepen our connections across the political aisle,” Chalmers said, introducing him to key financial figures within the Biden administration and the Republican economic team.
Some modelling predicts the levies could cost American consumers up to $80 billion in some sectors, yet tax advisor Kevin Beebe has said any inflation will likely be offset by cuts to regulation that could spur economic growth and personal wealth.
Minister Very Confident With AUKUS
Meanwhile, Minister for Defence Capability Pat Conroy says he remains “very confident” that the trilateral AUKUS pact will still go ahead.“It will continue because it’s in the U.S.’s interest,” he said. “This is about getting greater deterrence in the Indo-Pacific. This is not charity. This is about the three countries enhancing our defence capability”
He pointed out that there is strong bipartisan support in the United States for AUKUS, with the three key pieces of AUKUS legislation having received 80 percent support in the Senate, and 75 percent in the Republican-dominated House of Representatives.
“We’ve already had two changes of government in the three countries, and it’s got stronger in Australia through the election of the Albanese government ... And the commitment in the UK, if anything, is stronger with the election of the Starmer Labour government.
“If you look at President Trump’s comments when he was last in power, he was very keen for allies and partners to invest in their own defence. That’s what Australia is doing ... At the same time as investing in cost of living relief, we’re spending records amounts in defence,” Conroy said.
