Tag Archive for: Australia-US relations

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.

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.

Australia’s plan for acquiring nuclear-powered submarines is on track

Since the announcement in September 2021 that Australia intended to acquire nuclear-powered submarines in partnership with Britain and the United States, the plan has received significant media attention, scepticism and criticism.

There are four major risks to the AUKUS national enterprise: the political will of all partners; delivery schedule; the cost of acquiring and sustaining the capability (including its impact on Australia’s broader Defence budget); and workforce challenges, both for uniformed personnel and within the submarine-building industry.

While these risks remain significant, the progress so far demonstrates a commitment to proactive mitigation. On the political front, the partnership demands considerable backing from Britain, the US and Australia amid global upheaval.

Yet despite changes in government across all three nations since AUKUS was first announced, the initiative has retained bipartisan support, a point reinforced by the US Congress supporting it through the passing of the National Defence Authorisation Act in December 2023, including the sale of three Virginia-class submarines to Australia.

The political will was further reinforced by the agreement of all three partners on the optimal pathway for Australia’s acquisition of nuclear-powered submarines within 18 months of its announcement and the signing of the trilateral AUKUS treaty in August last year, which came into effect in January.

Although the treaty was finalised before US President Donald Trump’s election, the new US administration has since shown strong support, with Secretary of State Marco Rubio calling AUKUS ‘something that I think you’re going to find very strong support for in this administration’ and a ‘blueprint’ for co-operation.

The new US secretary of defense stated in February that ‘the president is very aware, supportive of AUKUS, recognises the importance of the defence industrial base’.

Regarding the cost risk, while it is undeniably substantial, it is not orders of magnitude higher than the ill-fated conventional Attack-class submarine project. Senate estimates from October 2021 put that project’s acquisition and sustainment costs at almost $235 billion through to 2080.

In last year’s budget, the Australian government included money in the Defence allocation to cover the expected costs of acquiring nuclear-powered submarines over the next decade. While the overall defence budget remains a significant concern, this measure has been an important step in mitigating the cost risks of AUKUS.

Australia has been steadily increasing nuclear-submariner training in the US and Britain, and since mid-2024, shipbuilders from South Australia and Western Australia have been training on nuclear-powered submarines in Hawaii.

Whether these measures will prove sufficient remains to be seen, but it is a promising start.

Schedule risks remain a key concern, particularly for the phase two sale of three Virginia-class submarines set to begin in 2032. The Collins-class vessels are already beyond their intended service life, meaning the entire plan hinges on the Virginias arriving on time—or at least only slightly delayed.

The 2023 National Defence Authorisation Act, which lies at the heart of Malcolm Turnbull’s concerns, mandates that in 2031—270 days before the sale of the first Virginia-class submarine—the US president certifies that certain conditions are met. Notably, the transfer of the submarines will not degrade US undersea capabilities.

As Turnbull correctly notes, the US submarine industrial base is already struggling to meet its planned production rate of two Virginia-class submarines per year and is unlikely to reach its goal of 66 attack submarines by 2054.

However, this does not mean that the US president in 2031 would seek to undermine Australia’s submarine program by refusing to sell three submarines. Undersea warfare effectiveness hinges on more than raw submarine numbers; it depends on having the right submarines in the right place at the right time.

This is where access to Australia’s western naval base, HMAS Stirling—and the maintenance facilities it will provide for US nuclear submarines—becomes crucial. It will help ensure US submarines can be deployed effectively when and where they are needed.

Australia’s broader contributions, including the continued support of the Harold E. Holt Communications Station north of Exmouth, further bolster US undersea warfare capabilities by facilitating secure communications with nuclear-powered submarines in the region.

It is imperative for Australia to make clear to the US just how vital submarines are to our national security, and to emphasise that the extensive support we provide, including access to Australia’s strategically important geography, is part of the deal. This is especially important given the more transactional nature of the current US administration and alliance framework.

In response to Turnbull’s call for an ‘urgent assessment’, the answer is that Australia’s plan to acquire nuclear-powered submarines remains on track.

Yes, it carries significant risks—as any major national endeavour does—but the challenges have been identified, and mitigation measures are in place. The progress made over the last three and a half years is substantial. Rather than repeatedly reassessing the program, we should concentrate our political and intellectual capital on ensuring it stays the course.

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.

Open Australia versus closed United States

Beyond trade and tariff turmoil, Donald Trump pushes at the three core elements of Australia’s international policy: the US alliance, the region and multilateralism.

What Kevin Rudd called the ‘three fundamental pillars’ are the heart of Australia’s foreign policy consensus.

Even Robert Menzies had versions of those pillars in his policy Parthenon. The consensus dates from the dark days of World War II, when the United States stepped up to perform the vital role Menzies defined as the ‘great and powerful friend’.

The eight-decade lineage means Australia is not about to give up on alliance, region and multilateralism as expressions of our interests, history and geography. But Trump alters Australia’s understanding of what the pillars can support.

The scope of region has grown from the South Pacific and East Asia to become the Asia-Pacific, and now the Indo-Pacific. The sorry state of the United Nations means multilateralism offers a rules-based order where rules rupture and order buckles. The US ‘is turning against the liberal international order that it once forged’, Chatham House argues, drawing on its research for the US National Intelligence Council.  The alliance has deep roots in the dire days of 1942 when Washington made General Douglas MacArthur commander in the Southwest Pacific, instructing him to repel the Asian invader and hold ‘the key military bases of Australia as bases for future offensive action’.

The treaty expression of the alliance, ANZUS, now in its eighth decade, rests on a promise to consult about military threats. Thus, while NATO is shocked to sense Trump-sized holes in the promise of automatic military response to attacks, Australia has always understood the contingent nature of ‘consult’, all that ANZUS actually compels the signatories to do in case of security threats. The embrace of the alliance totem by Menzies raises three implicit questions about any US administration: How great? How powerful? How friendly?

Trump has changed the politics of the alliance consensus in Australia’s election. Peter Dutton proclaims: ‘If I need to have a fight with Donald Trump or any other world leader to advance our nation’s interest, I’d do it in a heartbeat.’

Fight the US president in a heartbeat? Roll over, Bob Menzies. A Liberal leader breaks an unwritten rule of Australian politics that states that any party doubting the alliance is punished by voters.

Former Liberal prime minister Malcolm Turnbull offered a meditation on how Australia must recalibrate ‘to discuss how we can defend ourselves without America’, arguing that ‘Trump makes it very clear he is both a less reliable and a more demanding ally.’ 

Canberra wise owls such as Dennis Richardson recognise this less-reliable-more-demanding judgement of the US, while still embracing the alliance. Attempting that balance, Dutton offers to fight Trump while maintaining that the AUKUS submarine isn’t at risk, because both sides of US politics see its benefits.

Even the crown jewels of the alliance lose shine. The Economist surveyed Trump’s damage to ‘the world’s most powerful intelligence pact’, the Five Eyes signal intelligence partnership of the US, Britain, Australia, Canada and New Zealand, identifying three risks:

—The US will disrupt the arrangement, ‘perhaps acting on its threats to boot out Canada from the Five Eyes’;

—The allies will share less, fearing that ‘the Trump administration will be lax in protecting its secrets’; and

—The most likely scenario is that Trump’s war on the federal bureaucracy and politicisation of the intelligence community ‘will cause turmoil and paralysis among American spies that spill over onto allies’.

In the new reciprocal tariff schedule just released by Trump, Asia is the top target. Countries getting tariffs in the 40 percent range include Vietnam, Cambodia, Sri Lanka, Laos and Myanmar; those in the 30 percent range include China, Taiwan, Indonesia, Thailand and Bangladesh; those in the 20 percent range include Japan, South Korea, India, Malaysia and Pakistan.

As Trump imposes tariffs to shut out the world, Australia could show the Indo-Pacific how open it is by killing the last of its tariffs, completing our trek from being a highly protected economy to one of the most open in the world. Australia’s remaining tariffs range from 3 to 5 percent. We could quickly go to zero. Bryan Clark of the Australian Centre for International Trade and Investment says: ‘Abolishing tariffs would lower prices for consumers, reduce business costs and simplify supply chains, boosting resilience in a disrupted global market.’

Zero tariffs would be an emphatic response to an autarkic US and a practical invitation to the rest of the Indo-Pacific. Australia would answer bad policy with good policy—open Australia versus closed US.

Australia surveys volatile and unpredictable geoeconomics

The international economics of Australia’s budget are pervaded by a Voldemort-like figure.

The He-Who-Must-Not-Be-Named is Donald Trump, firing up trade wars, churning global finance and smashing the rules-based order.

The closest the budget papers come to hinting at Voldemort are two references to the ‘US administration’.

Last year, Treasurer Jim Chalmers worried about a ‘fraught and fragile’ world. This year, the anxiety is realised; what was fragile is in pieces. Chalmers mourned a ‘volatile and unpredictable’ global economy, telling parliament: ‘The 2020s have already seen a global pandemic, global inflation and the threat of a global trade war. The whole world has changed as a consequence.’

Surveying that changed world, the budget papers predict global growth will stay subdued for the next three years, because of ‘considerable uncertainty’ (hi, Voldemort). Treasury’s three-year estimate of global growth is 3.75 percent, ‘the longest stretch of below-average growth since the early 1990s’.

In the budget, Treasury estimates the effect of the United States imposing a 25 percent tariff on all imports of durable manufacturing goods, such as steel and aluminium. While the tariff may lead to ‘a reduction in the real GDP of Australia, China and the United States over time’, the total effect of the tariffs on Australia’s economy by 2030 is ‘modest’. The indirect effect of the tariffs is nearly four times as large as the direct effect, reflecting the importance of trade flows between Australia, China and the US.

Inflation in the US would persistently increase as imports become more expensive, Treasury notes, while Australia would see ‘a small temporary increase in inflation’ because of depreciation of the Australian dollar. Model in retaliatory 25 percent tariffs by all countries, including China and Australia, and ‘the loss in real GDP is amplified’.

Treasury lists the factors pushing against China: immediate pressure from its property downturn, trade conflict with the US and ‘longer term, structural challenges, including a shrinking workforce and lower productivity growth’. While China grew by 5 percent last year, the forecast for this year is 4.75 percent, falling to 4.25 percent by 2027.

Japan’s growth is expected to be around 1.25 percent this year, then lower in 2026 and 2027. India is expected to keep powering on at more than six percent over 2025–27, driven by ‘robustness in domestic consumption, increased government spending, easing of monetary policy, and an expansion of the manufacturing sector’.

Beyond China, East Asia is forecast to grow by 4 percent over 2025–27, with domestic demand in key economies bolstered by an easing of monetary policy. ‘However, escalating trade tensions could dampen investor confidence and weigh on growth.’

The Voldemort effect on Australia’s discussion of geoeconomics is the same on geopolitics. What Canberra thinks of Trump versus what Canberra publishes about the administration is the difference between night and day.

To give you a hint of Canberra’s dark reality, consider US international relations professor, Daniel Drezner. His writing on US foreign policy is always measured and carefully judged, but on Australia’s budget day he published an article titled: ‘American Foreign Policy Is Being Run by the Dumbest Motherfuckers Alive’.

Canberra shares the horror, even if it’d use more Australian-flavoured swearwords. The contortions this forces on policy statements is on display in Australia in the World – 2025 Snapshot, issued by the Department of Foreign Affairs and Trade.

Foreign Minister Penny Wong’s foreword observes: ‘Australians face confronting signs that assumptions we have relied on for generations are less assured, with international security increasingly fragile. We live in a world of increasing strategic surprise—ever more uncertain and unpredictable.’

Any global scene-setter from an Australian foreign minister during the past 80 years would have had the US at its heart. Not this foreword. Perhaps there’s a Voldemort sighting in Wong’s lament: ‘Authoritarianism is spreading. Some countries are shifting alignment … Institutions we built are being eroded, and rules we wrote are being challenged.’

The text of the document drops the coyness to judge: ‘President Trump’s America First agenda envisages a different role for the United States in the world.’

The Trump reality is balanced by the paper’s traditional statement of what the US has been: ‘The United States of America is our closest ally, principal strategic partner and largest two-way investment partner. The Indo-Pacific would not have enjoyed its long, uninterrupted period of stability and prosperity without the United States and the security it provides, and it remains critical to a favourable balance in our region.’

Working for that balance, the DFAT strategy is to ‘prioritise region, relationships and rules’, focus on the Indo-Pacific and seek ‘unprecedented’ partnerships in the South Pacific while ‘turbocharging our economic ties with Southeast Asia’.

And hope that a volatile and unpredictable Voldemort doesn’t wreck too much.

Elbridge Colby’s vision: blocking China

Elbridge Colby’s senate confirmation hearing in early March holds more important implications for US partners than most observers in Canberra, Wellington or Suva realise. As President Donald Trump’s nominee for under secretary of defence for policy—the Pentagon’s chief strategist—Colby gave testimony that is a window into the administration’s approach to China and what that means for allies and partners across Oceania.

Colby commands attention not as a partisan operator but as a genuine analytical thinker. As the chief architect of the 2018 National Defense Strategy, he orchestrated the United States’ pivot to Asia through changes to force posture, acquisition priorities and strategic focus. His 2021 book The Strategy of Denial has become required reading for defence planners. In it, Colby argues that the US must direct its military power to deny China hegemony over Asia, rather than pursue global primacy or retrenchment.

The vision he laid out before the Senate Armed Services Committee was neither the primacy-obsessed neoconservatism of the Bush era nor the strategic restraint and belt-tightening advocated by US progressives and libertarians. Instead, Colby argued for ‘prioritised engagement’—a strategy that recognises the limits of US power while refusing to abandon core commitments.

This ranking is important for Australia and Pacific island nations.

First, Colby’s confirmation suggests strategic prioritisation of the Indo-Pacific. Throughout the testimony, he stressed that China is ‘the biggest, most powerful rival we have faced in probably 150 years.’ While other theatres might command attention, Colby made clear that resources must flow to deter Beijing first. The unfunded $11 billion priority list from the US military’s Indo-Pacific Command is, in his words, a strategic failure that demands rectification.

Colby’s testimony also flashed warning signs for allies hoping Washington would shoulder the burden of regional security. His insistence that ‘we have a one-war military and change’ reflects a hard-nosed pragmatism—a stance that reinforces calls for allies to increase defence spending. These demands may prove challenging even for Australia, which has already committed to defence spending increases, provides key regional intelligence and offers the US military access to Australian ports and airfields. They are probably more challenging for smaller Pacific Island countries or other regional partners with limited resources.

Colby expressed reservations about AUKUS, despite describing Australia as ‘perhaps our closest ally in the world’ that has ‘been with us even in our less advisable wars’. His concern was that the arrangement could potentially reduce the US’s submarine availability during a crucial period.

This concern reflects a common Trump administration line that support for alliance commitments must not come at the expense of the US’s ability to deter China. This tension between alliance building and direct deterrence capability is not new. Colby has consistently emphasised re-assessment and re-organisation of alliances around the paramount goal of preventing Chinese hegemony.

Such an America First position creates both challenges and opportunities for Australia. The challenge lies in potential timeline slippage for submarine delivery; the opportunity comes from Colby’s desire to ‘do everything we can to make this work’ by revitalising the US’s industrial base to produce more submarines for the US and its allies. Australian defence planners understand this dual message from Washington, but Australian taxpayers also deserve an explanation from their government.

For Pacific island states caught between Washington and Beijing, Colby’s approach suggests more direct US engagement. When questioned about regional coalitions, he expressed scepticism of a ‘NATO-like alliance’ in the Indo-Pacific, preferring more tailored bilateral relationships. This points to a strategy of supporting critical nodes in the US’s defensive perimeter, rather than building expansive regional architectures. Colby argued in his book that the US should cultivate and strengthen capabilities among a ‘deny China’ coalition rather than pursue diffuse multilateral frameworks.

The issue underpinning Colby’s testimony is the mismatch between the US’s global commitments and its current military capabilities. He repeatedly invoked the Lippmann gap—a disparity between strategic ends and available means.

Colby presents prioritisation not as a choice but as a necessity, recognising that the US industrial base has atrophied while China’s has bloomed. Noting that China has ‘a shipbuilding capacity over 230 times that of the United States’, he underscored a US industrial deficit that must be addressed.

If confirmed, Colby would seek tailored deterrence approaches for specific contingencies rather than general regional dominance. He would also want better stewardship of US resources and stronger allied defence capabilities. He understands the industrial limitations and recognises that resources—including decisionmakers’ and strategists’ time and attention spans—directed toward one theatre necessarily come at the expense of another.

With Colby at the Pentagon’s strategic wheel, allies should expect more US demands. Australia, with its resources and strategic location, will face increased pressure to accelerate its defence buildup and repeated asks from the US to step into the breach. Pacific island states will need to navigate even more carefully between economic enticements and competing security guarantees that may come with more explicit conditions than in the past.

To avoid a Ukraine-style quid pro quo, Australia needs to work with the US on critical minerals

With Donald Trump back in the White House, Washington is operating under a hard-nosed, transactional framework in which immediate returns rather than shared values measure alliances. For Australia, this signals a need to rethink its approach to the US relationship.

A key step would be to work with the United States in the extraction and processing of Australian critical minerals. By partnering with the US in this area, and freeing both countries from reliance on China, Australia can solidify its alliance position. It can raise itself further above the level of Ukraine, whose vast reserves of critical minerals (including rare earth elements) have become a mere bargaining chip in negotiations with Washington.

Trump’s objective with Ukraine—a minerals-for-security quid pro quo—is emblematic of the new US foreign policy doctrine, in which assistance is granted not on principle but in return for something tangible. Since Australia is a top-four global producer of rare-earth elements, with reserves critical to US defence and technology industries, a question arises: could Trump demand a similar deal from Australia?

Australia should not wait for the request to come but rather put forward a strategy, or series of proposals with the US and other partners such as Japan, that are in the interests of itself and global security.

Unlike Ukraine, which seeks military aid to fight an immediate existential threat, Australia has an alliance with the US that is still based on the shared strategic interest of regional stability and deterrence of aggression. Articles III and IV of the ANZUS Treaty oblige the parties to ‘act’ in response to threats against the other, but interpretation of that has always been uncertain.

Under Trump’s America First doctrine, coming to Australia’s aid could be accompanied by a compensating demand for greater access to Australia’s rare earth elements, lithium, cobalt and titanium.

Unlike Ukraine, however, Australia is not merely a resource supplier. As a regional power with strategic assets of immense military value to the US, it has a far stronger bargaining position.

Trump’s approach to alliances is brutally simple: nations must prove their worth in tangible, immediate terms. This is where Australia has an advantage. Beyond critical minerals, it provides the US with something far more valuable: strategic positioning and intelligence infrastructure. Robertson Barracks in Darwin hosts rotational US Marine deployments, bolstering US force posture in the Indo-Pacific without the cost or political sensitivity of permanent basing. Joint Defence Facility Pine Gap is essential to US intelligence, surveillance, and reconnaissance, providing real-time missile warning and electronic signals intelligence that the US cannot easily replicate elsewhere. Harold E Holt Naval Communications Station is one of the US’s primary links to its submarines, securing its undersea deterrence in the Indo-Pacific. Northwest Cape and Cocos Islands radar installations are vital to US Space Command, tracking adversary satellites and space debris amid China’s expanding orbital footprint.

If Trump sees Ukraine’s rare earths as leverage, Australia must ensure that its strategic assets are recognised as even more valuable. The risk lies in failing to assert this before any transactional demands are made.

Australia cannot afford to passively assume alliance obligations will hold under a leader who views diplomacy as a business process. Instead, Canberra must shape the terms of engagement, reinforcing why its role in the Indo-Pacific delivers more long-term value to the US than simple access to its minerals. This requires a more assertive, transactional approach that speaks Trump’s language of hard bargains while safeguarding Australia’s sovereignty.

Australia should pursue a strategic critical minerals agreement with the US that reduces both nations’ dependence on China’s dominance of rare earth supply chains and processing. A deal that prioritises joint investment in refining and manufacturing capacity, rather than just raw material supply, will strengthen sovereign capabilities, enhance supply chain resilience, and ensure long-term security for both economies.

This type of practical initiative would complement Canberra’s framing of the alliance as one of true partners, with emphasis on joint military infrastructure, intelligence cooperation and Indo-Pacific stability as assets of equal value worthy of security guarantees. Strengthening leverage before negotiations are forced to start by some third-party action is essential to ensuring the US recognises that Australia’s strategic geography, intelligence facilities and force integration are irreplaceable advantages.

Expanding resource partnerships with like-minded nations such as Japan and EU members will reduce dependency on any single power’s economic coercion tactics. Pre-emptively signalling non-negotiable red lines will reinforce that while Australia is willing to cooperate, access to sovereign resources cannot be dictated under duress.

For the US, Ukraine’s rare earths are a short-term geopolitical play. In contrast, Australia’s strategic positioning and alliance role are long-term necessities. As the Indo-Pacific becomes the central theatre for global competition, the US needs Pine Gap, RAAF Tindal, HMAS Stirling and Robertson Barracks. The difference between Ukraine and Australia lies not just in geography but in bargaining power. In Trump’s transactional world, Australia must ensure it negotiates from a position of strength, not subservience.

How Australia, with friends, can secure its place in critical minerals

Australia’s critical minerals sector is at a crossroads. As the United States recalibrates its industrial policies under President Donald Trump, Australia’s role in securing non-Chinese supply chains for critical minerals has never been more important.

To secure its critical minerals industry in partnership with friends such as the US, Australia must ensure US trade policies actively support its push to move up the value chain. It also needs a strategy to sustain key production during downturns, must better align critical minerals, defence and industrial policies, and it should push for stronger reciprocal investment from allies, especially in processing and refining.

While Australia is at the centre of such initiatives as the US’s Minerals Security Partnership and AUKUS, practical outcomes such as viable new supply chains depend on targeted investment and policy coherence. The 2024 suspension nickel mines in Western Australia and ongoing challenges in rare earth and lithium processing expose serious vulnerabilities. Australia risks becoming a weak link in the supply chain, rather than a strategic powerhouse.

Established in June 2022, the Minerals Security Partnership was designed to promote responsible mineral production and processing among partner countries. Joe Biden considered Australia a key part of this vision, but Trump’s return adds uncertainty. While his administration is pushing for reduced dependence on China, his inward-looking trade policies could unintentionally harm Australia’s contribution.

If tariffs extend to processed or refined critical minerals, as they cover aluminium, Australia may be discouraged from moving up the supply chain. As of 2023, Australia supplied about half of the world’s raw lithium but lacked the processing capacity to realise the material’s full value. Mineral refining remains a weak point; China dominates the sector. Australia needs investment to compete, and the US is the partner of choice. Yet Australia supplies relatively few critical minerals to the US, limiting its leverage​.

At least five Western Australian nickel mines suspended operations in 2024 due to global oversupply and falling prices. The closures resulted in major job losses and raised concerns about supply chain resilience.

Nickel is a strategic material, with uses in batteries and defence. Indonesia, the world’s top nickel producer, is aligning itself closely with China and has joined the BRICS. So declining production in Australia is a strategic misstep.

Rather than waiting for market forces to decide the fate of its nickel industry, Australia should have used its 2023 critical minerals strategy to stabilise production. More importantly, countries in the Minerals Security Partnership, particularly the US, should have stepped up and invested in Australia’s mining and processing capabilities. Friend-shoring needs to be more than just rhetoric.

Despite setbacks in nickel, Australia is making progress in rare earths. Lynas Rare Earths is expanding its processing facilities in Kalgoorlie, and Iluka Resources is developing Australia’s first fully integrated rare earths refinery at Eneabba. Federal funding supports these projects.

China controls more than 90 percent of the world’s rare earth refining. It also has used export restrictions and bans as a geopolitical tool.

Australia’s Critical Minerals Production Tax Incentive—a 10 percent tax credit for onshore processing—raises serious questions. Since Australia lacks a viable downstream industry, such as refining, alloy production, or manufacturing, these processed materials still go to China. Australian taxpayers are just subsidising the middle stage of the supply chain, only for China to capture the higher-value downstream benefits. Without a full industrial chain, this policy doesn’t create real resilience in supply; it just makes Australian critical minerals slightly cheaper for China.

Australia’s critical minerals strategy also affects its national security one. Nuclear submarines rely on more than a dozen critical minerals, including rare earths for sonar systems, cobalt for high-performance batteries and titanium for hull construction. Other advanced defence systems depend on stable critical mineral supplies.

Securing these materials requires a coordinated approach. The US, through the Defense Production Act, can prioritise domestic mining, refining and processing of key materials for defence and high-tech industries, reducing reliance on imports from potentially hostile nations. In 2024 Australia was designated as a domestic source for funding, showing the potential for deeper collaboration and greater supply chain resilience.

If the US and Britain see Australia as a long-term defence partner, they should be investing in its critical minerals sector. AUKUS should be a platform for strengthening Australia’s industrial base, including processing and refining critical minerals.

Australia’s approach to critical minerals is guided by a suite of strategic policies and documents that play a role in securing supply chains, strengthening Australia’s industrial base and strategic position, but better alignment is needed.

Closer coordination of critical minerals policy with its defence, industry and trade strategies can revitalise capacity in the industry while helping to diversify mineral supply chains away from China.

Australia can’t afford to take a passive approach. Global supply chains are shifting fast. If Australia wants to be a cornerstone of Western critical mineral security, it must act decisively and demand that its allies do the same.

Securing Australia’s interests in a Trumpian trade world

Australia must adopt a sophisticated and multi-layered strategy to engage the second Trump administration on trade and security. Australia must frame its trade relationship with the US in terms of its direct contribution to US national security and job creation.

Donald Trump’s second presidency, not yet 100 days old, is already sending shockwaves across the global trade. Australia’s economic and national security and the future of Indo-Pacific security architecture depend on navigating an unpredictable trade landscape. Understanding the new administration’s trade policies and their link to broader security considerations is essential for Australia’s economic prosperity and broader national interests.

The previous Trump administration made clear its perception that many countries were taking advantage of the United States. This concern became a guiding strategic principle, extending beyond trade imbalances to encompass security burden-sharing. Australia has long been a good trade and security partner to the US, and it navigated the first Trump administration with aplomb. While our trade surplus played a role, it was not the decisive factor.

Two elements underpinned Australia’s success. First was Australia’s commitment to defence spending, as evidenced by the 2016 Defence White Paper and its pledge to meet a target of 2 percent of GDP. Second was Australia’s increasingly assertive stance towards China, even at the risk of short-term economic pain. Willingness to prioritise security over immediate economic gain earned Australia considerable respect within the administration.

Australia’s current strategic settings may fall short of the Trump administration’s expectations. While the AUKUS partnership bolsters Australia’s defence credentials, a closer examination of defence spending beyond this high-profile initiative reveals vulnerabilities. Moreover, there is a perception that Australia’s China policy has softened, potentially undermining its standing with the new administration.

Assuring the administration of Australia’s support for the US’s national security and economy requires highlighting sectors where US-Australia economic cooperation directly enhances US defence capabilities. In addition to Australia’s $3 billion investment in expansion of US shipyards, Australian industry and manufacturing has been deeply embedded in the US defence supply chain for many decades.

For instance, as part of a memorandum of understanding with the US, Australia has long supplied parts for F-35 fighters assembled in Texas and bought by Australia. Australian defence firms collaborate with US contractors, providing important components and technology for submarines, warships and cybersecurity solutions. Australia and the US are also deepening critical-minerals cooperation for US military and aerospace applications, including cobalt and lithium for defence-related battery technologies.

This framing must extend beyond specific sectors to encompass the broader alignment between the two countries. 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, contribute to a secure and stable environment conducive to US interests.

While the US may favour bilateral trade arrangements and a tiered system prioritising democratic economies, Australia must continue championing the existing rules-based international trading system. Australia is the 2025 chair of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Commission, whose member states accounts for about 14 percent of global GDP. Canberra thereby has a unique opportunity to coordinate action on US tariffs in the group and reaffirm member states’ commitment to free and open trade. Australia is likely to find strong support for this initiative, particularly as members Canada and Mexico face complicated trade disputes with the US.

Australia should use its membership in the Regional Comprehensive Economic Partnership, noting sensitivities with Chinese membership, and engage with European partners through the World Trade Organization to maintain a diversified trade portfolio.

Maintaining close ties with the US administration and avoiding escalatory trade disputes is paramount. With US$77 billion in two-way trade and bilateral investment stock valued at US$1.6 trillion, Australia must emphasise the mutual benefits of the economic relationship and the potential damage that protectionist measures could inflict on both countries.

This engagement will require an understanding of the administration’s priorities and concerns. Australia must communicate its value as a strategic and economic partner, underpinned by a mutually beneficial bilateral free trade agreement and shared history. In Trumpian terms, Australia must be clear that it is no economic or security freeloader; its global influence is due to real expenditure of time, effort and resources at a level well above that expected of a middle power.

While maintaining strong ties with the US is essential, Australia must also enhance its domestic economic resilience and diversify its trade partnerships. This approach should include investing in innovation, developing new industries and strengthening ties with regional partners. Such measures will reduce Australia’s vulnerability to external shocks and enhance its strategic autonomy.

By addressing the new administration’s concerns and demonstrating its value as a reliable ally and economic partner, Australia can secure its interests and navigate the challenges of a Trumpian trade world.