Australia frets with the impending return of Donald Trump
There are fears Australia could suffer as Donald Trump takes office more determined than ever - and a humble block of cheese could be a sign of things to come.
National
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In the dairy fridge of a Manhattan supermarket is a small sign of what’s at stake for Australia when Donald Trump re-enters the White House on Monday.
Sitting next to a range of US-made cheeses is “Old Croc” cheddar. It may not be sold in Australia, but the packaging makes no bones about its origin: “Born in the land down under,” says the wrapper, which adds it is “crafted from pure Australian cow’s milk, all natural and imported from Australia”.
The problem is Mr Trump is not a huge fan of imports.
While he hasn’t waxed lyrical about dairy products, it’s likely he’d prefer Americans to opt for cheeses from Vermont rather than Victoria.
And he’s a big fan of tariffs, upping the price of imports to reduce the demand for them.
From trade to defence, Australia has much to lose if Mr Trump’s “America First” policy does indeed target the land down under. Even if his gaze doesn’t rest on Australia, his policies on China could indirectly still cause immense pain at home.
Trump 2.0 – if his policy matches his rhetoric – could be “terrible for Australia,” an economist told news.com.au.
And yet, Canberra – so far – may be breathing a sigh of relief as Mr Trump has largely avoided Australia in his pre-inauguration barbs.
Canada and Mexico expect steep tariffs to be imposed while Greenland and Panama wonder if the new president is serious about his murmurings to use military force on their lands.
In contrast, relations with Australia seem relatively cordial.
Prime Minister Anthony Albanese spoke to Mr Trump in November, which he said was a “very constructive discussion”.
Rudd
There have been concerns about the relationship between Australian ambassador to the US Kevin Rudd and Mr Trump.
In years gone by, Mr Rudd had been scathing of the President-elect.
In March, Mr Trump hit back slamming Mr Rudd as “a bit nasty,” and declaring that “he won’t be (in the post) for long,” once he became president.
Yet last week, the PM confirmed Mr Rudd and Mr Trump had now made “direct contact,” and Mr Rudd had told the President-elect he was looking forward to the inauguration. For the past year, the former PM has been kept busy building relationships those close to Mr Trump.
That came after former prime minister Scott Morrison spent his New Year with Mr Trump at Mar-a-Lago. Mr Morrison may no longer have a government role, but it won’t have harmed Australia to have such a significant figure so close to him. Nor mining magnate Gina Rinehart who has also been hanging out with Mr Trump.
AUKUS on track
Some of that schmoozing may well be paying off.
On Thursday, Marco Rubio, Donald Trump’s pick as secretary of state – the US’ top diplomat – praised the AUKUS defence pact at his nomination hearing.
AUKUS is a defence alliance between Australia, the US and UK, the centrepiece of which is the building of Australia’s first nuclear-powered submarines.
“It is something that I think you’re going to find very strong support for in this administration,” Mr Rubio said of AUKUS.
Indeed he was glowing about how AUKUS could be a “blueprint” for other alliances.
“This is more defence-related, but it’s an example of how we can leverage the power of partnerships with allies to reach outcomes and objectives such as creating a geopolitical and strategic balance in the Indo-Pacific region and beyond”.
Mr Trump hasn’t said a huge amount about AUKUS but the incoming administration’s enthusiasm for it is not a huge surprise considering his focus on countering China.
And also, perhaps, because Australia will be shovelling billions of taxpayer dollars to the US to help get the submarines built.
Yet Mr Trump appears lukewarm on other defence alliances, even mulling the annexation of Greenland and Canada both if which are covered by NATO.
That could embolden adversaries like China who may feel a Trump-run US would be less likely to intervene in world affairs.
James Corera and Malcolm Davis of the think tank the Australia Strategic Policy Institute said Canberra will have to continue to prove its worth to Washington
“Australia can’t expect Donald Trump to judge its strategic value by historical ties.
“The focus will be on our willingness to protect ourselves and capacity to contribute to shared strategic interests.”
Tariffs
Even if Trump is all in on AUKUS, he may not be so on Australian trade.
Australia exports goods worth $12.6bn to the US every year, with meat and vaccines being high on the list. Australian companies like Atlassian, Woodside, Visy, Worley and Rio Tinto are big investors in the US.
But the US exports far more in return, with $33.7bn worth of goods heading across the Pacific towards us including cars, planes and financial services.
As such, Mr Trump’s persistent issues with countries that have a trade surplus with the US doesn’t apply to Australia.
‘Bad for Australia’
But that doesn’t mean Australia can’t get caught up in tariffs, which Mr Trump is a big fan off, economics professor at the University of New South Wales Richard Holden told news.com.au.
“If Trump does what he’s said he will do on tariffs – 20 per cent on all countries and maybe 50 – 60 per cent on China, bad things will happen,” said Prof Holden.
US households will be “much worse off,” he said with some reports suggesting rising process caused by tariffs could amount to $4100 annually per American household.
Tariffs of that size and magnitude, “could easily lead to a breakdown of the international trading system with raft of tit-for-tat tariffs from numerous countries,” said Prof Holden.
“That would reverse 50 years of progress toward free trade and globalisation that has led to two billion people being lifted out of extreme, abject poverty in China and India, as well as great prosperity for advanced economies.
“This would be terrible for Australia as a country whose prosperity is built on trade”.
But even if Australia escapes Trump’s tariffs, the knock of effect of tariffs on China could ricochet southward, said Prof Holden.
China is Australia’s number one trading partner with total trade between the two worth more than three times that between Australia and the US.
“It could make China much poorer, which is also bad for Australia.
“It would make it much harder to sell high-end exports like lobsters, Wagyu beef, expensive wine, etc to the burgeoning middle and upper-middle class in China.
“But Trump is very transactional,” he said.
“This may all be a threat to be used in various negotiations with China over any number of issues”.
Certainly, Australia has had some positive noises headed its way from the incoming administration.
But what Mr Trump says and what Mr Trump does are often two separate things.
The block of Old Croc cheese in a New York supermarket could yet get much more expensive under Mr Trump.
And if Americans stop buying Aussie cheese, Aussie meat and Aussie wine, that could have a very real effect on Australia.
Originally published as Australia frets with the impending return of Donald Trump
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