The eruption of a global trade war under returning US President-elect Donald Trump could plunge the Australian dollar below US60¢, particularly if China responds to higher tariffs by allowing its own currency to weaken, National Australia Bank has warned.

The Aussie sank to a four-month low of US64.32¢ this week after Trump flagged his intention to impose a 25 per cent tariff on all products from Mexico and Canada, and an additional 10 per cent on goods from China. He cited concerns over illegal immigration and the trade of illicit drugs – particularly fentanyl, a deadly synthetic opioid – as reasons for the levies.