“Donald Trump’s election as the next United States’ President creates particular and immediate economic and national security challenges for Australia which will require deft handling to ensure that we are not damaged by what may be a massive policy shift from the world’s biggest economy,” Innes Willox, Chief Executive of the national employer association, Australian Industry Group, said today.
“As a key strategic partner and ally of the United States, Australian prosperity has long relied on stable policy settings which have promoted openness and rejected widespread tariffs and protectionism.
“The Trump election presents four key challenges for Australian policy makers who will have to move quickly to shore up our long standing economic and security relationship with the United States.
“Firstly, the Government must work to exempt Australia from the expected across the board tariff increases threatened by the returning President. Australia has benefited for over 20 years from its Free Trade Agreement with the United States which has facilitated the movement of goods, services, capital and people between our two countries. To jeopardise that agreement would be to imperil the prosperity and success of Australian businesses and their employees across the economy.
“Allied to that, Australia must continue to stand up against rampant protectionism which only serves to create inefficiencies, sustain high inflation, stifle innovation and embed unemployment. Mr Trump clearly wants to promote local business interests as all governments should, but building tariff walls is a dead-end road.
“Secondly, Australia is again at risk of becoming collateral damage in a prolonged trade war between the United States and China. Our economy continues to be heavily reliant on technology from the US and on China as a market and a supplier and it is likely that if the Trump administration pushes ahead with a 60 per cent tariff on Chinese goods, Australian businesses would be collateral damage.
“Australian businesses are already reporting market distortions being created in expectation of a US-China trade dispute. This includes increased shipping costs and delays in shipments caused by increased trade between the two nations ahead of the election. Given our strong trade and investment links with both countries, Australia risks being particularly damaged by a trade dispute.
“Thirdly, the Government needs to quickly shore up our AUKUS security arrangements with the United States. Australia already has billions of dollars in sunk costs on the AUKUS project, as well as having spent huge amounts of time and labor in its development. A renegotiation of AUKUS - both Pillar One and Two - would have enormous ramifications for Australia’s national security.
“Geopolitical risks are already heightened impacting business sentiment and a delay in delivering AUKUS in response to changing American priorities would perhaps embolden those who would like to disrupt the rules based order.
“Our defence budget has already seen major disruption as a result of AUKUS, with defence suppliers anecdotally reporting a clear slow down in the Government’s current spend. It is imperative for AUKUS’s credibility that we do see American nuclear submarines operating in our waters in 2027 and local Australian capability is supported by Defence to eventually deliver locally manufactured submarines.
“Finally, Mr Trump has indicated that he would again withdraw the United States from the Paris Climate Agreement and would look to wind back the Inflation Reduction Act with a greater emphasis on the development of fossil fuels to power the American economy. This will have huge implications for the Government’s climate and energy ambitions and targets, including reaching a 2030 target and setting a 2035 target, which will impact the investment trajectory and focus on Australia. Successfully navigating this challenge will be complex for Australia’s Government.
“Australian industry will be keenly watching how Australia is positioned with the new administration to protect us from the inevitable shockwaves of the expected Trump economic approach. We hope and expect that the Australian Government, before and after our election next year, as well as our diplomatic representatives in the United States will be able to protect Australia’s interests at a time of significant change.
“For the past 80 years, what happens in the United States particularly matters to Australian prosperity given our deep economic and security ties. The next four years will be no different,” Mr Willox said.
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