The Albanese government is confident Australia will be spared further tariff hikes if it refuses to bow to the defence spending demands of the Trump administration, despite Spain being singled out for extra punishment for holding out against a similar demand.

As Prime Minister Anthony Albanese continued to hold his ground against Washington’s demand that Australia lift defence spending from 2 per cent of GDP to 3.5 per cent “as soon as possible”, Trade Minister Don Farrell said the issue had not been raised during ongoing tariff negotiations with the US.