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.