Tag Archive for: Donald Trump

Flexibility and awareness will help India deal with Trump (again)

India navigated relations with the United States quite skilfully during the first Trump administration, better than many other US allies did. Doing so a second time will be more difficult, but India’s strategic awareness and manoeuvrability will help it work with Donald Trump’s America once again.

The chaotic early months of the Trump administration have shown Washington’s partners that they must carefully navigate relations with the US for the next few years.

Indo-Pacific partners will likely fare better than European ones, as China appears to be a key and continuing concern for the US. And among Indo-Pacific partners, India probably stands to do better than others. India generally and Prime Minister Narendra Modi in particular show strong understanding of the game when they refrain from reacting to Trump’s negative comments.

This is unusual: the Modi government has usually been somewhat sensitive to outside criticism. Modi may be looking to the day when Trump moves on from whatever unpalatable comments he makes.

The bilateral relationship saw impressive wins during the first Trump administration. The US changed the name of its Pacific Command to the Indo-Pacific Command, acknowledging of the growing strategic role of India in the region. The US also granted India Strategic Trade Authorization Tier-1 status. This provided India with license-free access to a range of military and dual-use technologies and was a clear recognition of the enhanced confidence in US-India strategic partnership. As well as this, India developed and maintains multiple tracks of engagement with the US, including through its national security advisor, affording it greater flexibility.

There were also minilateral successes, with the Quad’s rejuvenation recognising India’s importance to the US. Many of the improvements made during the Trump administration were further strengthened under Joe Biden’s presidency.

On the other hand, Russia’s invasion of Ukraine put India in a difficult situation because of New Dehli’s traditionally good relations with Moscow. India was unhappy with Russian President Vladimir Putin’s naked aggression, but also reluctant to abandon its old partner, leading to some unhappiness in Western capitals with what was seen as India’s hypocrisy. In part, India’s reticence to upend its relationship with Russia was due to a lack of confidence that the US’s shift to New Delhi (and away from Beijing) was permanent—a view that other US allies may now understand better than they did.

Trump and his administration appear to favour a transactional approach to dealing with the Putin regime. This is causing concern for the US’s NATO allies while also making it less likely that the US will pressure India on its relationship with Russia. New Delhi can likely breathe easy on this point for the next four years.

But Trump’s tariff pressure presents other challenges. In the previous term, India managed to satisfy Trump with a few concessions alongside general goodwill and ideological messaging. This time, Trump is clearly much more determined and focused, especially on countries like India with which the US has a significant trade deficit.

This will likely be harder for India to manage this time around. India will have to concede much more, but it still has options to satisfy Trump. India may be helped by the fact that the initial tariff roll-out has been chaotic and confusing, with tariff rates and targets being changed seemingly every day.

Most tariffs have been postponed for few months, and the US is welcoming offers to negotiate bilateral trade agreements. This gives New Delhi a chance to once again use its diplomatic skills to secure a reasonable deal with Washington. Amid US-China tensions, India will also be acutely aware of the opportunities presented by Trump’s increased focus on China’s unfair trade practices.

India has room to manoeuvre. For example, automobile tariffs are one of Trump’s key focuses. Indian tariffs on direct automobile imports are high, at more than 100 percent. New Delhi appears reluctant to lower them, partly because of fears that it could hurt India’s thriving domestic automobile and auto parts manufacturing sector.

However, India will not be an easy market for US automakers to break into, even with low or no tariffs. Both General Motors and Ford, who had entered the Indian car market and established factories in India to compete more effectively, found that not all their products well suited the market. Even if India removes tariffs, it is difficult to imagine US manufacturers competing effectively in India.

Similarly, India has some options on the energy front too to entice Trump. India’s external affairs minister, Subrahmanyam Jaishankar, recently suggested that India might amend its nuclear liability law, which has prevented the US entities from entering the Indian nuclear sector.

US nuclear engineering company Westinghouse planned to build nuclear plants in India until a bill passed in 2010 imposing such onerous liabilities that it effectively prevented new plants from being built. If India does change the liability law or its provisions, it could stimulate not only the US nuclear power industry but also its own nuclear sector.

India could also buy petroleum from the US, reducing its trade surplus with the US of nearly US$50 billion and pleasing Trump.

India’s annual oil import bill is now well north of US$100 billion and will only increase. Redirecting purchases to the US would have negligible effect on the Indian economy.

Finally, India could buy more weapons from the US. Trump does appear to want to sell more US weapons, and India needs to keep buying as it faces a growing threat from China. There has already been some talk of the US offering Lockheed Martin F-35s.

Though dealing with Trump may be difficult, New Delhi does have some options, especially if it keeps turning the other cheek to his criticism. The Indian government does appear to recognise the need to keep Trump happy. This combination of strategic awareness and room to move may help India to manage the second Trump administration better than other US partners do.

Donald Trump’s first three months: rude, raucous and rogue

Sunday marks three months since Donald Trump’s inauguration as US president. What a ride: the style rude, language raucous, and the results rogue.

Beyond manners, rudeness matters because tone signals intent as well as personality.

Trump’s version of going rogue means to leave the herd, or to become savage or destructive. His rogue is about means and policy, shifting where the United States stands and what it stands for.

Manners maketh the man, but means maketh government.

Berating Ukrainian President Volodymyr Zelenskyy in the White House was the rough and rude stuff politicians usually do to each other behind closed doors. The rogue moment of policy significance and shocking symbolism was at the United Nations when the US sided with Russia in voting against resolutions to mark the third anniversary of the full-scale invasion of Ukraine. Trump embraces foes as he throws friends overboard, aiming for a quick peace in Ukraine by giving Russian President Vladimir Putin most of what he wants.

The US president is driven by his will, his wants and his whims. The only metric that counts is power. Get a great deal. Make a profit. Punish enemies.

Trump calls his tariff wall a ‘declaration of economic independence’ that will make the US ‘good and wealthy’. Offering a ‘stupidity theory of tariffs’, Nobel Prize economist Paul Krugman responds that Trump launches ‘a global trade war’, destroying 80 years of credibility in three months with ‘wild zig-zags’.

What’s so challenging about Trump’s style is that zig-zags are the strategy.

The US sets a 145 percent tariff on China’s goods; China’s answers with a 125 percent tariff on US goods. The world’s top two economies impose embargoes on each other. Trump may, indeed, zig to clinch a beautiful deal with China. But the isolationist and nativist standard is set. Trump believes that for decades the US ‘has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike’.

The US had the largest role in creating today’s world; under Trump the US is scared of the world it made, declaring a pox on Pax Americana.

Trump’s three months show he has learnt from his first term, when the adults in the room were a constant check on his will and whims. A more experienced president leading his remade Republican Party means fewer adult restraints.

Trump’s new treasury secretary, Scott Bessent, qualified for the adult label by getting the president to put a 90-day pause on the reciprocal tariffs announced on 2 April, because the bond market was melting. Wall Street, though, speculates Bessent won’t last long, because the first Trump administration showed that telling adult truths to the wild king soon ends cabinet careers.

Trump now attacks the foundations of Washington to get systemic shifts. He smashes so his vision can arise atop the rubble. In contrast, during the first-term soap opera, courtiers vied to handle the king while Washington kept ticking (many administration jobs were still vacant a year after Trump’s first inauguration).

The president luxuriates in the pomp, while his administration wields sharper authority. He still enjoys the king label, but the court politics forms factions.

Because loyalty is what Trump values most, the true-believer faction gathers around the MAGA cap that reads ‘Trump was right about everything’.

Standing amid the believers are those who see Trump as the perfect instrument to ‘burn down Washington’, as per the original subtitle of a book by the head of the Heritage Foundation on how to institutionalise Trumpism by torching institutions. The foundation created Project 2025 to write the conservative agenda for Trump’s administration ‘to take down the Deep State and return the government to the people’.

The tech bros, led by Elon Musk, want Trump to remove any Washington restraints so algorithms can get on with eating the world. The tech bro discomfort over trade war was voiced by Musk’s attack on Trump’s tariff tsar, Peter Navarro, as ‘dumber than a sack of bricks’. The tech vision of a borderless world crashes against Trump’s love of borders.

The China hawks fly with Secretary of State Marco Rubio and National Security Advisor Michael Waltz. Rubio’s version of Trump foreign policy starts by stating that the post-Cold War period of US unipolar dominance was an ‘anomaly’. Now, Rubio says, the US faces ‘a multipolar world, multi-great powers in different parts of the planet. We face that now with China and to some extent Russia, and then you have rogue states like Iran and North Korea you have to deal with.’

The view that the US is no longer as powerful as it was is Trump’s central argument. His answer is America First. The fear for allies is the prospect expressed by Australia’s previous ambassador to the US, Arthur Sinodinos, that this might become America Only.

President Trump is redefining America’s international role, and Australia has influence

In the week of Australia’s 3 May election, ASPI will release Agenda for Change 2025: preparedness and resilience in an uncertain world, a report promoting public debate and understanding on issues of strategic importance to Australia. This is an article from the report.

President Donald Trump’s America is done with being taken advantage of by other countries and is demanding more from its adversaries, its partners and, above all, its allies. Decades of Australian cooperation with the US on defence, diplomacy, intelligence and trade have established the right relationships to get a seat at the deal-making table. Australia now needs to use that access to convince the US that Australia’s robust trade and economic strength, whole-of-nation leadership in the Indo-Pacific and investment in rules and institutions benefit US national security and prosperity.

With his election mandate to ‘Make America great again’, President Trump is redefining US global leadership through economic statecraft, diplomatic coercion and hard-power threats. That’s accompanied by a ruthless redefinition of US budgetary priorities to address what the administration sees as core domestic challenges: illegal immigration, a bloated public sector, underutilised manufacturing capacity, and burdensome private-sector regulations that stifle American industry. A key goal is to reduce the US national debt, which currently sits at around US$36.7 trillion and 123% of GDP.

Elon Musk’s Department of Government Efficiency (DOGE) is slashing government spending on the basis that for too long US taxpayer dollars have been spent on bureaucratic passion projects and not on making America ‘stronger, safer, and more prosperous’. Ninety-two per cent of the grants and programs of the US Agency for International Development (USAID) have been cancelled, including many providing emergency food and medical aid in crisis zones. DOGE is working to fire most of the more than 13,000 USAID staff and contractors worldwide. The plan is for the remainder (294 people, with just eight in the Asia Bureau) to be folded into the State Department.

The State Department itself has been told to prepare for a 20% cut to staffing numbers and the closure of some consulates (primarily in Europe), and the Pentagon has been told to find budget cuts of 8% for each branch, some of which will be redistributed to priority projects. Significant cuts are being made to other departments. DOGE has also been tasked to review the US Navy and Coastguard’s troubled shipbuilding programs.

The Trump administration is unilaterally redefining the global trade environment to address what it sees as unfair trade imbalances and overregulation of US tech companies, and to build US manufacturing capacity, increase revenue, and force burden-sharing. To do that, President Trump on 2 April imposed a global minimum 10% tariff on imports to the US and continues to threaten up to 50% ‘reciprocal’ tariffs on those countries he considers the worst offenders. These complement global tariffs on imports of steel and aluminium, some automobiles and auto parts (including on countries, such as Australia, that have trade deficits with the US) along with specific tariffs on its own neighbours—Canada and Mexico. The harshest treatment has been reserved for China. Goods from China, Hong Kong and Macao have been excluded from US de minimis duty free provisions, and tariffs have been added to total around 125%.Further complicating the picture, the US has excluded some essential products from the proposed tariffs, including copper, pharmaceuticals, semiconductors, some critical minerals and energy.

In maximalist demonstrations of ‘might is right’ coercive diplomacy, Trump has sought to whitewash President Putin’s invasion of Ukraine and demanded that President Zelenskyy be ‘more grateful’ for US aid. He wants Ukraine to provide the US with rare earths and hydrocarbons in exchange for a voice in peace negotiations and some semblance of US security support. Trump is siding with Israel, closing its eyes as the international community protests alleged Israeli war crimes as the US seeks to strong arm peace in Gaza. He has also made it clear that he thinks the US should control Greenland and the Panama Canal to manage security threats from Russia and China.

Members of Trump’s cabinet insist that those machinations are aimed at enabling a more focused and strengthened US position against a rising and malign China, including to weaken President Xi’s influence over Putin and other leaders. Others say that it shows that the US considers that it has no allies, just competitors. Trump’s comments from the Oval Office on 28 February 2025, when he said, ‘I’m not aligned with Putin. I’m not aligned with anybody. I’m aligned with the United States of America’, would seem to support the latter.

While many American allies, including Australia, would agree that China represents the pacing security threat and that action should be taken to constrain Beijing’s malign activities, running roughshod over friends is unlikely to achieve that goal. The Trump administration appears to be targeting China’s economic and technological influence but in a way that has no care for the impact on America’s allies and partners.

So, what can Australia do?

Australia should protect itself, while also investing in its friends, partners and the trade and security institutions that sustain its prosperity and security.

The majority of American voters, many of whom felt let down by the unfulfilled promises of globalisation and multilateralism, endorsed President Trump’s promise to put US domestic interests at the centre of its foreign, defence and trade agendas. That’s felt deeply among working- and middle-class Americans, has been growing for many years, and is likely to remain the case for some time. To remain influential with the White House, Australia must advocate for its national interest priorities within that frame, recognising that Trump’s America isn’t withdrawing from global leadership, but that it’s fundamentally redefining what it considers that leadership to be.

America First economic statecraft: tariffs, investment, trade

Recommendation: The next Australian Government should continue to push back against Trump’s imposition of tariffs on Australia, maintaining a clear message that the unjustified tariffs do hurt the bilateral relationship but won’t affect the security alliance or AUKUS. The government should simultaneously explain to the Australian public that the tariffs act is an unfriendly one to a long-time friend while showing the Trump administration that the relationship won’t break but will be strained until the tariffs are terminated. Ongoing discussions with the US should focus on the fact that a strong Australian economy with robust trade ties benefits US national security, as is true for other US allies. US tariffs on Australia and other actions that de-stabilise the global economy may reduce the government’s ability to increase defence spending and weaken its leadership in Indo-Pacific security. They could also dampen enthusiasm for Australian foreign direct investment into the US. Australians might oppose closer ties with the US if they feel subject to US economic coercion and, indeed, it’s already assisting Beijing’s narrative in the region that all major powers act this way. If the Trump administration is attempting to counter the rise of China, its action against Australia will help Beijing, not Washington. Australia should oppose all tariffs against vulnerable Pacific economies, including because the action provides ammunition to support China’s claims of US self-interest.

Trump’s administration should hold Australia up as showing what ‘good’ looks like—an incentive to all other countries to be more like Australia in consistently carrying a fair share of the economic and security burden.

By the Trump administration’s own ‘fairness’ metrics, Australia is in an enviable position. It’s maintained a 2:1 trade deficit in the US’s favour since the 1950s and has a free-flowing exchange rate. For the first 20 years of the Australia – US Free Trade Agreement, Australia levied no tariffs on US goods, while the US only gradually reduced tariffs on protected US goods, such as lamb. At a time when the White House has prioritised attracting sources of trusted foreign capital to grow US industry and infrastructure, Australia’s $4.1 trillion in superannuation funds looking for diversified long-term investment opportunities overseas add to Australia’s value.

As the 13th largest economy in the world, the prosperity of which has long been driven by free trade, Australia relies on a well-functioning, rules-based international trading system. A global tariff war that doesn’t distinguish fair trading nations from unfair ones undermines that system, disrupts supply chains and increases prices. The Trump administration’s tariffs on steel and aluminium impose direct pain on Australian companies selling into the US market, undermining their contribution to the long-awaited expansion of the US industrial base. The Australian Government must ensure that US partners recognise that those imports are critical for US supply chains, and that defence-grade steel supports the US Navy’s uplifted shipbuilding program and future AUKUS submarines. Similarly, specialised Australian aluminium building products are needed by US industry, particularly as the country rebuilds after multiple natural disasters.

Australia, as the 2025 chair of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the members of which produce around 14% of global GDP) and as a member of the Regional Comprehensive Economic Partnership (the members of which produce about 42%), has a unique opportunity to coordinate the groups’ responses to the US tariffs and reaffirm member states’ commitment to free and open trade. Open and transparent leadership in those bodies, together with a close relationship with the Trump administration, will help to build Australia’s reputation as an influential partner of choice.

The World Trade Organization (WTO) has proven too weak to stop China flooding global markets with artificially low-cost exports to balance its weak consumer spendingor to make China stop bankrupting its competitors by manipulating the price of critical minerals such as nickel, lithium and cobalt. The previous Trump and Biden administrations had little interest in working to improve the WTO, blocking the operation of its dispute appellate body over concerns of judicial overreach. However, the current Trump administration’s desire to diversify its critical-minerals supply chains could offer a new opportunity to work with Australia and other like-minded partners in the WTO to curb China’s trade manipulation by modernising and strengthening WTO rules and procedures.

While challenging, the Trump administration’s tariffs on China are also an opportunity to reduce Australian business reliance on China and diversify supply chains. As Australian manufacturers and retailers seek alternatives to Chinese-made components, the Australian Government should incentivise Australian businesses to deepen their ties with ASEAN countries and with India, and resist accepting an influx of low-cost Chinese e-commerce diverted from the US market.

Australia should work with the Trump administration on implementation of its new America First Investment Policy, which is specifically designed to limit investment from adversaries, primarily China, and increase collaboration with allies and partners.

America First strategic policy: ‘Might is right’ or ‘Peace through strength’

Recommendation: Australia should encourage the Trump administration to collaborate on Indo-Pacific capacity building, infrastructure and security assistance to lessen regional dependence on China and blunt China’s influence activities in this key strategic theatre. Notwithstanding the shuttering of USAID, the US should honour its agreements and reform its tools of statecraft to enable agile and timely investment, including in partnership with the private sector on strategic regional infrastructure.

As part of that, Australia should offer to collaborate with the US (and others, such as Japan) to jointly fund Radio Free Asia and other critical development programs in our neighbourhood to help mitigate the effect of American budget cuts. Australia should also share with the US its experience of China taking over Radio Australia frequencies when the ABC ceased making short-wave transmissions.

Recommendation: To demonstrate Australia’s commitment to contributing to a secure, stable and prosperous Indo-Pacific, the new Australian Government should explain to the Trump administration that the 2024 National Defence Strategy and Integrated Investment Program are a 10-year demand signal for AUKUS defence and dual-use technology companies. It must also push ahead on quick wins for AUKUS Pillar II, focused on those aligned to the Trump administration’s priorities.

President Trump’s Inauguration Day directive to the Secretary of State called for US foreign policy to champion core American interests and put America and American citizens first. Despite that, Australia has more influence than many appreciate. The Trump administration’s first international meeting was of the Quad, held in Washington DC on 20 January, during which the US reaffirmed its commitment to strengthening a free and open Indo-Pacific. Secretary of State Rubio’s language about the Quad and the Indo-Pacific region contrasted strongly with the adversarial approach taken with Europe and NATO.

That regional focus concurs with early reporting that the Pentagon is to prioritise the work of INDO-PACOM and focus on the production and maintenance of Virginia-class submarines (needed for the US Navy and for AUKUS), and drones and counter-drone systems, in conjunction with key Trump election promises to secure the southern border and develop an Iron Dome–style missile-protection system. While they’re yet to get much media coverage, the strong protections in the America First Investment Policy against China gaining technological advantage from the US seem to confirm the administration’s focus on its only near-peer competitor.

The Trump administration clearly views its three Quad partners, Australia, India and Japan, as a net positive for US interests. From Australia’s perspective, that’s a legacy of President Trump’s first term, in which his focus on China saw him come to understand Australia’s strength in spending on defence and standing up to Beijing despite coercion. It’s possible, however, that the second Trump administration will also ask more of Australia, as US partners and industry push for assurances that Australia will continue to uplift its defence capabilities, invest in the AUKUS optimal pathway on submarines and see tangible outcomes from streamlined processes for AUKUS advanced capabilities.

President Trump’s pick for Undersecretary of Defense, Elbridge Colby, who respects Australia’s contributions on defence, wants Canberra to increase defence spending to over 3% of GDP. Regardless of the percentage, Australia should continually point to the US$3 billion investment that it’s making in expanding and modernising US shipyards, the progress achieved in training Australian submariners to drive Virginia-class nuclear-powered submarines, and the strategic benefits to the US from new submarine maintenance facilities in the Indian Ocean. Canberra should also highlight how increasing cross-fertilisation of Australian and US industry and manufacturing is adding resilience to US defence supply chains in the Indo-Pacific and that the 2024 National Defence Strategy and Integrated Investment Program are a 10-year demand signal for US, UK and Australian companies.

As the US seeks to counter Chinese influence in the Indo-Pacific, Australia should encourage the Trump administration to honour its regional development commitments and collaborate on further initiatives, notwithstanding the shuttering of USAID. Building off the success of the Australia–US–Japan Trilateral Infrastructure Partnership in funding undersea cables in the Pacific, which started with the first Trump administration, Australia can encourage US counterparts to adopt more innovative approaches to development and security. Key examples are the Falepili Union with Tuvalu (which provides Australia with strategic denial rights and Tuvalu with climate resilience monies and opportunities for migration), the agreement between Australia and Papua New Guinea (which encompasses development and security elements) and Australian Telstra’s acquisition of Digicel Pacific (the largest mobile provider in the Pacific, acquired amid rumours of interest from China Mobile).

The Trump administration’s interest in working closely with private-sector investors from allied countries offers an opportunity to take this work further, including to secure Indo-Pacific strategic infrastructure while delivering shared, sustainable, long-term returns on capital. Australia should encourage the US to reform its Development Finance Corporation and enable it to work in a more agile way with the Pentagon’s Office of Strategic Capital, the Australian Infrastructure Financing Facility for the Pacific and Japanese counterparts.

Australia’s unwavering commitment to a free and open Indo-Pacific, its willingness to confront Chinese assertiveness and its active participation in regional security initiatives, such as the Quad and the Trilateral Strategic Dialogue with the US and Japan, and its membership of the Pacific Islands Forum, contribute to a secure and stable environment conducive to US interests. The Trump administration’s prioritisation of the Indo-Pacific and desire not to cede influence to China presents an opportunity to have it lean into regional issues. In this vein, Australia should also encourage President Trump to visit the Pacific, including the US Compact states, in 2025 and attend the 2026 ASEAN East Asia Summit in the Philippines.

Reset Pax Americana: the West needs a grand accord

The world is trying to make sense of the Trump tariffs. Is there a grand design and strategy, or is it all instinct and improvisation? But much more important is the question of what will now happen, as new possibilities emerge from the shock effect of the tariff announcements and from subsequent moves and counter-moves.

For many, the United States is behaving erratically and imprudently, not least by lashing out at its allies and partners and by confusing financial markets. It’s risking its credibility by engaging in what appear to be irrational and self-harming actions that have already generated systemic financial shocks. Confidence in US leadership and economic rationality is being shaken.

To judge what might happen next, one must see the through-line—namely, Trump’s long-held grievance about what he sees as unfair global economic arrangements and widespread freeriding on the US, and his willingness to deploy all instruments of power to set this right. For Trump, the functioning of the global financial and trading system has seen the US incur the costs of entrenched trade deficits, hollowing out of the US industrial base and overvaluation of its currency, a consequence of the reserve status of the US dollar and US Treasury bonds.

At the same time, the cost of underpinning global security since 1945, through the so-called Pax Americana, has been borne disproportionately by the US taxpayer, who now carries US$36 trillion in federal debt. For the first time in its history, the US is spending more on debt interest than on defence. Meanwhile, allies and partners, with few exceptions, have minimised their defence spending wherever possible.

It is clear that Trump will no longer tolerate a situation where other countries gladly consume the security that the US produces, at significant cost to US taxpayers, without contributing materially to that security and while enjoying the prosperity it brings.

Bargains regarding prosperity and security are often intertwined. The 1944 Bretton Woods agreement was negotiated at a time when the postwar security order was being shaped. The deal ended in August 1971, when President Richard Nixon suspended the US dollar’s convertibility to gold and introduced a 10 percent import tax to compensate for ‘unfair exchange rates’—overvaluation of the US dollar. In September 1985 in what became known as the Plaza Accord, the US agreed with leading western economies that the US dollar would be devalued in a managed fashion to tackle a mounting US trade deficit. All the while, the US kept up its end of the bargain in protecting allies and partners.

We should not be surprised that from time to time, the US might deploy its enormous strategic and financial power to reset the terms of global prosperity and security. Whether by design or otherwise, we appear to be in another such moment.

Through the shock of the Trump tariffs, the US has created for itself an extraordinary opportunity to restructure the global trading and financial system, with two twin objectives in mind. These are to increase the relative gains from that system for Americans and to reallocate the costs of Pax Americana, so that they are borne more by allies and partners and less by US taxpayers.

To this end, the US should pursue a new global agreement, which might be called the Pax Americana Accord. It should bring all issues to the table in the process, so we are not dealing later with other, related shocks—say, with US currency or debt issues—or with doubts over US alliance commitments.

The best way to do this, in a way that would take maximum advantage of the opening that the tariff shock has created, would be for Trump to call an urgent meeting of what might be termed the ‘G7+’. This would not be a meeting whose objective would be to craft and issue a worthy but forgettable communique. Terms would be set out and agreed in outline, under the threat of total trade war. The details could then be hammered out over the remaining balance of the 90-day pause period.

The G7+ would consist of the US, Germany, Japan, Britain, France, Italy and Canada (as G7 members), along with India, Brazil, South Korea, Australia, Mexico, Indonesia (representing itself and the rest of Southeast Asia) and the European Union (in its own right and also representing the 24 non-G7 EU members). The G7+ would represent 67 percent of global GDP. Others, such as Turkey, Saudi Arabia, Switzerland, Argentina, the United Arab Emirates and Israel, could sign on to the new accord at a later date, as might Taiwan.

The meeting would agree the broad outlines of a Pax Americana accord, which would ultimately address and, as necessary, resolve the following issues:

—US chronic trade deficits and US complaints about tariff and non-tariff barriers to its exports;

—China’s deliberate manufacturing overcapacity, which is creating global trade and financial imbalances, unacceptable supply chain dependencies and a dangerous capacity for rapid war production, all endangering the security and economic resilience of the US and its allies and partners;

—China’s re-exports to the US by way of countries such as Mexico, Vietnam and Indonesia, which would have to be blocked, lest China evade what will be crippling US tariffs and other trade barriers (if a US-China deal cannot be separately done);

—Technological de-risking in relation to Chinese goods and services, to prevent China from gaining security advantages by passing high-risk technology into foreign economies;

—The enduring role of the US dollar as the world’s reserve currency, a global public good that the US provides;

—Long-term funding of the US Treasury, whereby US debt underpins global security (by paying for US military capabilities, another global public good) but where others who consume that security also enjoy income returns as debtholders and are not liable for the recapitalisation of those capabilities;

—US concerns about its industrial base, the strength of which also underpins global security and so represents another global public good;

—Defence spending of US allies and partners, most of which will need to build greater capacity to defend themselves without having to rely on US forces, at least in the early stages of a war;

—Potential for co-production of defence capability, in which allies and partners make larger contributions to US development programs; and

—Strategic reservation of critical minerals and other tangible assets by US allies and partners and the granting to the US of concessional access to these assets.

This is an ambitious agenda. A Pax Americana accord would address US trade grievances but more importantly would better spread the costs and risks of global security. It would reset the terms of Pax Americana such that it could be sustained. The US would be reassured about its strategic solvency, and allies and partners would take an active stake.

This would require negotiation of complex deals and arrangements. Achieving it would mean treading a narrow path. Careful and precise execution would be required, especially to reassure financial markets, which are always inclined to lose their minds during periods of uncertainty. If only we had a modern-day James Baker, the driving force behind the 1985 Plaza Accord. With the mandate of Reagan, who set the direction without managing the details, Baker deployed US power through velvety diplomacy in pursuit of US interests, knowing that US allies and partners would always prefer to deal with America, even when it was having a bad day. Has their attitude changed from Baker’s time? We are likely to find out over the next 90 days.

China will have to brought into any accord at some point. The underlying problems that have led us to this point are largely a consequence of Beijing’s strategy of concentrating industrial power in China. This has stunted development of a services-based economy in China, distorted global trade and supply chains, hollowed out Western industrial bases, delayed the industrialisation of the Global South and created national security and economic resilience risks for the US, its allies, partners and others.

Through a concerted strategy, as sketched out here, global trade could be rebalanced such that China would have to divest itself of overcapacity, including to the benefit of less developed countries.

By reallocating the costs of Pax Americana, the US would gain more financial and strategic resources to deal with the risk of China’s growing power and its strategic ambitions. It would be sustainably solvent, sitting at the centre of a reformed global system of prosperity and security. That would be worth the volatility of recent days. Whether we have arrived here through great cunning or as a consequence of instinct and improvisation does not matter much. What matters is the art of getting the deal done.

A letter to America from an appreciative ally

Donald Trump’s philosophy about the United States’ place in the world is historically selfish and will impoverish his country’s spirit.

While he claimed last week to be ‘liberating’ Americans from the exploiters and freeloaders who’ve been screwing them, his assault on global trade was really just another step towards the US’s relieving itself of the responsibility it admirably took on as a new kind of superpower—one that embraced global leadership and used its power and wealth to shape the world for the better.

Americans should ask themselves, ‘Do you want to be remembered as the nation that changed the human story by overseeing a global system of rules and ethics that restrained people with power from doing whatever they liked to people without it? Or do you want history to describe the US as the country that, after a few generations of working to make the world a better place for all, chose the less exceptional path?’

All countries self-mythologise, sometimes in ways that elevate them. The uplifting story that the US has told about itself is that it is a special nation—a type of nation to which others can aspire, an indispensable nation. The US is great not in the sense of simply powerful. Many countries and empires have been powerful throughout history. Rather it is great in the sense that, as the world was becoming more connected in every way from sea trade to social media, it has recognised that global leadership based on a set of universal values was its responsibility.

Globalism is not, as Trump would have it, an ideology. It is a fact. Advances in technology, many driven by US innovation, as well as political, social and cultural progress, have brought the world together in the realms of both bits and atoms. US hegemony during this transformative period has helped deliver 80 years of remarkable stability, enabling the greatest ever period of global prosperity. The share of the global population living in extreme poverty, for instance, fell from 42 percent in 1981 to 9 percent in 2017, according to World Bank figures.

Most of the commentary about Trump’s revolution—the evisceration of foreign-aid agency USAID, the moral equivalence shown to Russia and Ukraine, the vengeful tariffs, the contempt towards likeminded democracies in Europe—has focussed on the self-defeating absence of strategic pragmatism. Commentators have shown a reticence in questioning the idea that the US has every right to act like an ordinary country and recalibrate its foreign policy to prioritise its national interest unyieldingly over the global interest.

Perhaps it’s presumptuous to say the US has an enduring duty. Granted, we can’t demand it continue to pursue global interests alongside its national interest. But as the biggest, richest, most powerful democracy at a time of rapid and confusing change, it has a unique opportunity—perhaps one that won’t come again any time soon—to keep leading the world through a period of progress, openness and stability, however bumpy that road might be.

Trump argues that global mindedness has come at an unacceptable cost to the US. But data shows otherwise. US GDP per capita, according to the latest World Bank data, is about US$83,000. Australia’s is about $65,000, with Britain $50,000, France $45,000, Germany $55,000 and Japan $34,000. China’s is about $13,000. The US has performed by far the best of any advanced economy in recent years. If the US’s friends are screwing it, they’re doing a lousy job.

The US-led global system has benefitted Americans as it benefitted others, some of those others perhaps more than Americans in relative terms, enabling those countries partially to catch up. That seems to clash with Trump’s win-or-lose guiding philosophy; if someone else has done well, that must be at our expense.

True, China has taken advantage of the liberal rules-based trading system and of globalisation. And yes, many friends of the US have neglected their defence spending obligations. But that message has now been heard loud and clear. However laggardly some allies have behaved, that doesn’t mean that the US is taken for granted. Indeed, it is deeply admired. Americans should not let Trump convince them that allies and partners are unappreciative spongers.

Perhaps the US wealth advantage would be wider still if it had pursued America First for many decades. But to what end? To become a bastion of material privilege in perpetuity? A nation of Mar-a-Lago inhabitants?

Think about those quintessential American stories, the type that Hollywood, more than any cultural centre, has mastered. When the bad guys ride into town or when the world starts to fall apart, the hero is the one who fights back, rallies everyone else, takes charge and puts things right. It’s not the person who shrinks away, tries to save his own skin or, worse, to profit from the chaos.

So this is a plea from an appreciative ally. The US that has taken responsibility for the world’s problems has billions of real friends and admirers. History will be very kind to it. You don’t need to make America great again. You already are great. But now you’re in serious danger of being just ordinary.

Trump’s tariffs: Australia’s worry is the effect on its trading partners

With the execution of global reciprocal tariffs, US President Donald Trump has issued his ‘declaration of economic independence for America’. The immediate direct effect on the Australian economy will likely be small, with more risk from the confluence of tariffs on its key trading partners. But the global effects of the United States’ tariff regime will extend beyond the economic effects, with implications for America’s reputation as a trusted and reliable partner. All the while, China stands ready to fill the gap.

With Trump’s latest executive order, from midnight on 3 April the US will impose far-reaching tariffs on other countries to compensate for the alleged combined impact of foreign countries’ tariffs and non-tariff barriers on US exports. Emphasising the ‘fairness’ of the approach in a White House Rose Garden address on 2 April, Trump said the reciprocal tariffs of up to 50 percent equated to just half of the trade measures levied by those countries against America. These were complemented by a baseline tariff of 10 percent on goods from every country—except for Canada and Mexico, which are already subject to tariffs of 25 percent. The 10 percent would not be added to goods already subject to tariffs, such as semiconductors, steel and aluminium.

The 10 percent levied against Australian goods exports to the US will likely have a minimal impact on Australia’s economy, despite being estimated to constitute a direct cost the Australian industry of US$1.6 billion. Speaking to the media after the tariff announcement, Prime Minister Anthony Albanese said the tariffs were unwarranted and ‘not the act of a friend’. But he also sought to reassure, noting the exports constituted less than 5 percent (US$16.6 billion) of Australian goods exports. By comparison, more than 30 percent of Australia’s exports are sold to China.

Australia provides duty free access to US imports under the 2005 Australia-US Free Trade Agreement. However, the Trump administration’s concern with Australia is likely with what it considers non-tariff barriers as outlined in the findings of the USTR report on Foreign Trade Barriers (PDF), of 1 April. The report details several longstanding US concerns with Australian biosecurity regulations on agricultural products (certain meat and fruit imports), issues with Australia’s policies on pharmaceuticals (which mandate a price for drugs under the Pharmaceutical Benefits Scheme) and payment for news content on social media. While it doesn’t mention Australia’s recent social media protections for children, this has also been raised by the US tech industry as a non-trade barrier.

The 10 percent tariff scenario will impose short-term direct costs on Australian industry. Most affected will likely be Australian beef and other meat products, exports of which to the US were worth US$4 billion in 2024 and accounted for more than a quarter of US imports of foreign beef. The US has been Australia’s largest market for beef in recent years. Despite having a large beef industry, the US relies on certain imported beef products. This could give a degree of leverage as Canberra progresses long running negotiations with Washington on the issue. Albanese has ruled out any compromise on other US concerns, in particular social media protections and the Pharmaceutical Benefits Scheme.

Australia’s trade-exposed economy will be more vulnerable to second and third order effects as some of Australia’s key trade partners respond to these new tariffs. While tit-for-tat tariffs may depress the Australian economy, greater impact will likely come from regional partners adapting trade strategies and adjusting supply-chains to minimise their exposure, and from businesses delaying investment decisions due to uncertainty around US and other governments’ policies.

Four of Australia’s top five trading partners, accounting for 44.3 percent of Australia’s two-way trade in 2023–24, are subject to higher US tariffs: China (a 34 percent tariff), Japan (24 percent), South Korea (26 percent) and India (27 percent). Developing or emerging economies, such as Vietnam (46 percent) and Indonesia (32 percent), will likely find it harder to absorb the effect of tariffs, due to their reliance on export-driven growth and deep integration in global manufacturing supply chains. The resumption on 2 April of exclusion of goods from China and Hong Kong from duty-free de minimis treatment will be an additional hit to the Chinese economy.

The Indo-Pacific is home to most of the world’s people. It accounts for 60 percent of global GDP and two-thirds of global economic growth. Since former president Barack Obama’s much vaunted Pivot to Asia from 2011, the US has sought to focus more strongly on the region for strategic and economic reasons. Despite some efforts such as the Indo-Pacific Economic Framework, US protectionism has hampered meaningful progress on US trade with the region. By comparison, China is likely the top trading partner for most countries in the world, particularly in Asia. As China actively competes with the US for influence with these countries, steep US tariffs on their exports may cause them to orientate away from the US market, deepening this trend. Tariffs will undermine US efforts to establish itself as a preferred partner in the Indo-Pacific region while providing China with ammunition to support its claims of American self-interest and unreliability.

This article has been corrected in several places. It now says the direct cost to Australian industry from Trump’s tariff on Australia is estimated at US$1.6 billion, that it will likely have minimal economic impact, that the administration’s Australian concern is likely with what it sees as non-tariff barriers, that Australian pharmaceutical price regulation applies not only to imported pharmaceuticals, and that the tariff on India is 27 percent.

Diplomacy is the newest front in the Russia-Ukraine war

The war between Russia and Ukraine continues unabated. Neither side is in a position to achieve its stated objectives through military force. But now there is significant diplomatic activity as well.

Ukraine has agreed to a 30-day ceasefire, in large part to patch up relations with US President Donald Trump’s administration, which unravelled during a 28 February Oval Office confrontation between Trump and Ukrainian President Volodymyr Zelensky. Russia rejected the ceasefire proposal, instead suggesting (but not implementing) a prohibition on attacking energy infrastructure. Both sides also indicated a readiness to accept a ceasefire in the Black Sea, but with Russia linking its support to a relaxation of sanctions, it is far from clear when—or even if—such a limited ceasefire would start, much less what it would encompass.

Such partial steps, if implemented, could be a way-station to something more significant. But it is at least equally possible that partial steps would not lead to a comprehensive peace agreement. Russia could prosecute the war even if the Black Sea were not an active theatre.

The biggest question remains US policy. The Trump administration has used a combination of pressure and incentives to persuade the two sides to stop fighting. But its approach has been skewed toward offering benefits to Russia while bringing heavy pressure to bear on Ukraine.

To be clear, it is appropriate to offer Russia certain incentives. This could include a willingness to resume high-level contacts and restaff embassies, support for limited relaxation of sanctions if specified conditions are met, and to allow Russia to keep its long-term objectives for Ukraine on the table.

What is not acceptable is to embrace flawed Russian positions, such as its claims to Crimea, Donetsk, Luhansk, Kherson and Zaporizhzhia based on the results of illegal referenda conducted by Russian occupation forces. It is one thing for Trump’s envoy to the Kremlin, the property-developer-turned-novice-diplomat Steve Witkoff, to characterise Russia’s stance and quite another for him to adopt it as his own.

More broadly, there is no good reason to introduce final-status considerations at this point. The goal for now should be an open-ended ceasefire agreement, not a permanent peace treaty. In this instance, excessive ambition is likely to be the enemy of the possible.

To achieve a cessation of hostilities, the agreement ought to be as clean and simple as possible. Only two elements are essential for a viable ceasefire: a cessation of all hostilities, and a separation of forces, ideally with a peacekeeping contingent between them.

Everything else, including the disposition of territory and populations, should be left for final-status negotiations. For now, both sides should be allowed to arm or agree to security arrangements with third parties. Nothing should be done to preclude measures that would buttress a ceasefire. Russia should be permitted to retain North Korean troops on its territory; Ukraine could invite forces from European countries.

What is essential is for the United States to continue providing military and intelligence support to Ukraine. Such support is the only way to convince Russian President Vladimir Putin that further stalling is not in his interest, and is essential to Ukraine’s ability to deter renewed Russian aggression even if there is a ceasefire agreement. But it need not be unlimited: such US assistance has totalled around US$40 billion a year for three years—a level that is likely to suffice for the foreseeable future.

The goal should be to give Ukraine what it needs to deter and defend against Russian aggression, not to liberate its lands. To assert, as Witkoff did, that there is no reason to worry about renewed Russian aggression is not serious. After all, the current war is Russia’s second invasion of Ukraine since 2014, when it illegally annexed Crimea. Given Putin’s intentions, what matters are capabilities.

Matters could come to a head by summer, when the pipeline of congressionally-approved arms for Ukraine runs out. The Trump administration will have to decide (if it has not already done so) on the connection between the security relationship with Ukraine and US diplomacy.

As we attempt to discern what the administration will choose to do, the February 2020 deal that the first Trump administration signed with the Taliban should give us pause. The agreement was negotiated over the head of the US’s Afghan partners through direct talks with the Taliban, paving the way for the Taliban’s swift takeover of Afghanistan a year and a half later. One can only hope that the price President Joe Biden paid, both domestically and internationally, for implementing Trump’s deal will lead Trump to think twice before abandoning Ukraine to a similar fate.

Trump should also keep in mind that abandoning Ukraine would not bring peace. Zelensky, who is more popular than ever at home (thanks in no small part to the infamous Oval Office meeting) would likely opt for no ceasefire or peace treaty rather than one that compromised Ukraine’s core interests. It could fight on in one form or another for years using domestically produced arms and weapons imported from Europe and Asia—and, free of US restrictions as a condition of aid, it might even be tempted to act more aggressively in its choice of targets within Russia.

At the same time, Russia would most likely view US separation from Ukraine as an opportunity to press or even escalate militarily. Far from bringing peace, a US military cutoff of Ukraine could actually bring about an escalation in the fighting.

The stakes are high, and not just for Ukraine. What plays out with Russia will have a significant effect on the future of Europe, on whether China uses force against Taiwan, or North Korea against South Korea, and on how the US is perceived both by its friends and enemies around the world.

The world can still keep Trump in check

US President Donald Trump has shown a callous disregard for the checks and balances that have long protected American democracy. As the self-described ‘king’ makes a momentous power grab, much of the world watches anxiously, aware that his administration’s growing illegality and corruption is eroding not only the US Constitution but what remains of the post-1945 international order. A return to great-power spheres of interest looks increasingly likely.

But foreign governments, businesses and civil-society groups have more power than they think in the face of a revisionist United States. They can take five steps to create external checks and balances on the Trump administration and on anti-democratic forces more broadly. Anti-democratic forces around the world cast a long shadow, but with a boost of courage and the strength of solidarity, pro-democracy coalitions can come together to fight for the light.

The first step is to unite and make as much noise as possible. Would-be autocrats depend on divide-and-rule tactics, maximising fear by convincing individuals and governments that they alone are on the chopping block. Imagine if all governments in the Americas (with a few exceptions, such as Argentina) denounced Trump’s designs on the Panama Canal and Canada, loudly and repeatedly, and refused to refer to the Gulf of Mexico as the Gulf of America. Indeed, they could collectively rename it the Gulf of the Americas.

Another option is for all the Association of Southeast Asian Nations and European Union governments to issue a joint statement repudiating Trump’s claim that Ukraine started the war with Russia, instead insisting on the truth: Russia violated Ukraine’s territorial sovereignty. The Organization of Islamic Cooperation’s 57 members could collectively introduce a censure resolution in the United Nations General Assembly condemning any suggestion of expelling all Palestinians from Gaza, as Trump casually suggested last month, while reaffirming a collective commitment to a Palestinian state.

It may prove even more consequential if European countries (EU members plus Switzerland, Britain and Norway) joined strategic partners such as Canada, Japan, South Korea and Australia in outlining the global chaos that Trump will unleash if he tries to take Greenland by force, thereby legitimising war as a foreign-policy tool. These denunciations should be issued repeatedly in all appropriate international forums.

The second step is to push back hard on Trump’s provocations, escalating to absurdity. If the US raises tariffs from 100 percent to 200 percent, governments should announce that they are raising them to 400 percent. This is a game of chicken, not a negotiation. The US may be the world’s largest economy, with a GDP of nearly US$28 trillion, but the combined economies of the EU member states, Britain, Norway, Switzerland, Canada, Mexico, Japan, South Korea and Australia are 25 percent larger, totalling nearly US$35 trillion. Instead of coming to the White House with hat in hand and flattery at the ready, hoping to get an exemption from the coming trade wars, world leaders would be better off presenting a united front.

Third, use law to counter Trump’s lawlessness. The rule of law is not simply a code of conduct approved by duly constituted authorities. It is an entire system designed to channel dispute away from the battlefield and into the courts, to replace armed combat with legal jousting before an impartial referee. To the extent that the Trump administration ignores or rejects national and international law, foreign governments, businesses and civil-society groups should use their own courts to make their case and enforce their rights.

Lawfare could be especially useful for fighting corruption and economic malfeasance. When the actions of US officials violate cross-border contracts or give illegal advantage in international business deals, local prosecutors should apply their national law. This could help create a ‘zone of law’ for global commerce. But under no circumstances should they engage in vendettas or politically motivated prosecutions.

The fourth step other countries must take is to create a thriving domestic tech sector. This requires time, but few things are more important over the longer term. Governments and citizens should have options other than US or Chinese tech, particularly in the AI phase of the digital revolution. Moreover, as the EU well knows, competing with the existing tech giants requires the removal of trade barriers and the integration of capital markets, both important steps toward enhancing regional power on the global stage.

Lastly, the Trump administration has made clear its disdain for multilateral institutions, having rejected the UN’s sustainable development goals and questioning whether UN agencies’ projects ‘reinforce US sovereignty by limiting reliance on international organizations or global governance structures.’ Other countries—especially rising middle powers—should seize this moment to take over these institutions and make them their own.

It is time, for example, to give up on the UN Security Council. The permanent members will never agree to reform it and will continue to veto resolutions affecting their own interests, as the UN’s founders expected. Russia’s veto in the Security Council means that the General Assembly has already become the primary forum for addressing issues regarding the Russian invasion of Ukraine.

Rising middle powers such as India, Brazil, Mexico, South Africa, Nigeria, Egypt, Indonesia and Saudi Arabia should seize the opportunity of great-power deadlock or collusion to align global institutions with the actual configuration of power in the world. They should insist on equal representation and promote decision-making based on weighted majority rule, which would give every country a genuine voice. The EU would have much to gain by supporting such reforms, but even if it does not, an international system designed by the victors of World War II must either change or sink into irrelevance.

These are radical moves. But the leader of the world’s most powerful country is implementing a radical agenda. The US system of checks and balances is the primary means of protecting democracy. The world can help.

Trump could make Asia more united

US President Donald Trump has raised the spectre of economic and geopolitical turmoil in Asia. While individual countries have few options for pushing back against Trump’s transactional diplomacy, protectionist trade policies and erratic decision-making, a unified region has a fighting chance.

The challenges are formidable. Trump’s crude, bullying approach to long-term allies is casting serious doubt on the viability of the United States’ decades-old security commitments, on which many Asian countries depend. Worse, the US’s treaty allies (Japan, South Korea and the Philippines) and its strategic partner (Taiwan) fear that Trump could actively undermine their security, such as by offering concessions to China or North Korea.

Meanwhile, Trump’s aggressive efforts to reshape the global trading system, including by pressuring foreign firms to move their manufacturing to the US, have disrupted world markets and generated considerable policy uncertainty. This threatens to undermine growth and financial stability in Asian economies, particularly those running large trade surpluses with the US—such as China, India, Japan, South Korea and countries in the Association of Southeast Asian Nations.

Currency depreciation may offset some of the tariffs’ impact. But if the Trump administration follows through with its apparent plans to weaken the US dollar, surplus countries will lose even this partial respite, and their trade balances will deteriorate. While some might be tempted to implement retaliatory tariffs, this would only compound the harm to their export-driven industries.

Acting individually, Asian countries have limited leverage not only in trade negotiations with the US, but also in broader economic or diplomatic disputes. But by strengthening strategic and security cooperation—using platforms such as ASEAN, ASEAN+3 (with China, Japan and South Korea), and the East Asia Summit—they can build a buffer against US policy uncertainty and rising geopolitical tensions. And by deepening trade and financial integration, they can reduce their dependence on the US market and improve their economies’ resilience.

One priority should be to diversify trade partnerships through multilateral free-trade agreements. This means, for starters, strengthening the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—which includes Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Britain and Vietnam—such as by expanding its ranks. China and South Korea have expressed interest in joining.

The Regional Comprehensive Economic Partnership—comprising the 10 ASEAN economies, plus Australia, China, Japan, New Zealand and South Korea—should also be enhanced, through stronger trade and investment rules and, potentially, the addition of India. Given the Asia-Pacific’s tremendous economic dynamism, more robust regional trade arrangements could serve as a powerful counterbalance to US protectionism.

Asia has other options to bolster intra-regional trade. China, Japan and South Korea should resume negotiations for their own free-trade agreement. Japan and South Korea are a natural fit, given their geographic proximity and shared democratic values. The inclusion of China raises some challenges—owing not least to its increasingly aggressive military posture in the region— but they are worth confronting, given China’s massive market and advanced technological capabilities. With the US putting economic self-interest ahead of democratic principles, Asian countries cannot afford to eschew pragmatism for ideology.

Beyond trade, Asia must build on the cooperation that began after the 2008 global financial crisis. The Chiang Mai Initiative Multilateralisation, which provides liquidity support to its member countries (the ASEAN+3) during crises, should be strengthened. Moreover, Asian central banks and finance ministries should work together to build more effective financial-stability frameworks—robust crisis-management arrangements, coordinated policy responses and clear communication—to stabilise currency markets and financial systems during episodes of external volatility.

Trump is not the only reason why Asia should deepen cooperation. The escalating trade and technology war between the US and China is threatening to divide the world into rival economic blocs, which would severely disrupt global trade and investment. But there is still time to avoid this outcome, by building a multipolar system comprising multiple economic blocs with overlapping memberships. By fostering economic integration, within the region and beyond, Asian countries would be laying the groundwork for such an order.

In an age of geoeconomic fragmentation, Asian countries could easily fall victim to the whims of great powers. But by strengthening trade partnerships, reinforcing financial cooperation, enhancing strategic collaboration and building economic resilience, they can take control over their futures and position Asia as a leading architect of a reconfigured global economy.

Trump’s critical minerals order may harm Australian interests

US President Donald Trump is certainly not afraid of an executive order, signing 97 since his inauguration on 20 January. In minerals and energy, Trump has declared a national emergency; committed to unleashing US (particularly Alaskan) resource potential; and established the National Energy Dominance Council (NEDC), granting it considerable executive powers.

His latest minerals order, titled ‘Immediate Measures to Increase American Mineral Production’, aims to overhaul US domestic production and reshape domestic and international critical mineral supply chains. It could derail Australia’s efforts for greater domestic production in the process.

At the strategic level, Trump wants to end US reliance on Chinese and adversarial mineral supplies and massively boost US production for national security and economic gains. While there is room for international partners to assist, the order is clearly aligned with the Trump’s broader America First approach.

Operationally, the US government will attempt to unlock mineral and energy production by administratively and financially prioritising new and existing projects and slashing regulatory red tape across critical minerals, uranium, and other commodities.

This will occur across the supply chain, targeting ‘mineral production’  encapsulating mining, processing, refining and end-use manufacturing in technological productions, including semiconductors, permanent magnets, and electric vehicles.

Executive orders are designed for immediate effect. Trump’s minerals order is no different, outlining near immediate actions for departmental heads and agencies. Much of it overseen by the NEDC.

For example, within 10 days of signing, agencies involved in mine production permitting are to produce a list of viable projects to prioritise. In the following 10 days, the Secretary of the Interior Doug Burgum, through his role as NEDC chair, will select priority projects for immediate approval.

Similarly, legislative reform to mine waste disposal and treatment—presumably reducing environmental protections—is ordered to be introduced to congress within 30 days of signing.

Alongside Burgum as NEDC chair and Secretary of the Interior, US Secretary of Defense Pete Hegseth and Secretary of Energy Chris Wright are tasked with significant decision-making across new investments and project prioritisation.

Project prioritisation, expedited approvals, and expedited delivery of supporting infrastructure are the primary levers through which Trump aims to unlock US mineral production. Achieving each will likely come at cost of environmental and social protections.

Whether it achieves rapid overall production increases remains to be seen.

According to S&P data, US mines have an average lead time of 13 years. Discovery and exploration studies account for the largest proportion at 8.7 years on average. Rapid permits should reduce the lag time between the completion of feasibility studies and mine construction, but it will not open new mines overnight.

Commercial factors, technical and financial feasibility, and major financing hurdles must also be considered. Trump’s slate of mineral and energy orders contain some measures to increase financial support to domestic mining and processing projects, including directing the International Development Finance Corporation to distribute more domestic funding. But doing so quickly and efficiently will test the US government. Industry, additionally, will most likely want to see sustained policy commitment and market effects before investing into new capital intensive projects.

Moving forward there will be opportunities for Australia to grasp, as well as risks to manage.

Several Australian mining companies are already operating or proposing government-supported processing plants in the United States. This includes Lynas Rare Earths’ refinery in Texas, Syrah Resources’ graphite refinery in Louisiana and South 32’s potential battery-grade manganese plant fed by its new Hermosa mine in Arizona. These projects could become important linkages in the sector and may benefit from these recent reforms.

The US will also remain reliant on international supply for some minerals and will need to prioritise close international partners with large mineral deposits, such as Australia.

The US has already demonstrated its willingness to provide generous concessional loans and fund minerals processing projects. The financing provisions of the minerals order will create further opportunities while increasing competitive pressure on Australia—particularly regarding our Future Made in Australia aspirations.

But there are risks to Australia’s ability to compete. Faster approvals and greater government funding commitments may draw investment to the US rather than Australia. However, poor implementation or environmental and social backlash may undermine this competitive advantage.

Australia should be most concerned if the US successfully expands its raw outputs quicker than its downstream industry, as US mineral production could flood the market. In 2024, Australia saw similar effects of oversupply in the nickel market (largely due to Indonesia), leading to temporary shuttering of nearly all Australian nickel operations.

Australia will need to assess the risks presented by US production increases. The government must work with industry to protect our domestic production and assess whether demand-side policy responses, such as a national stockpile, will be needed.

Trump’s mineral policy puts America first. Australia must respond and engage directly with the US to negotiate collaboration and maintain fairness in the market. International forums, such as ASPI’s Darwin Dialogue, may become particularly important to achieving this.