Albanese risks becoming a bystander to Trump’s trade whims

Since US President Donald Trump unleashed global economic chaos with his “liberation day” tariffs, Prime Minister Anthony Albanese and Australian exporters have been able to take comfort in one fact. Yes, the tariffs may be frustrating. Yes, they breach Australia’s free trade agreement with the United States. But no other country in the world has been able to do any better.

“There’s no doubt that there’s no one that’s got a better deal,” Albanese said following Trump’s dramatic April press conference in the White House Rose Garden.

Anthony Albanese has been left in the cold by Donald Trump.Credit: Marija Ercegovac

That boast could quickly evaporate after Trump floated plans to lift the baseline tariff rate for US imports from 10 per cent to somewhere between 15 and 20 per cent. As with everything in Trump’s volatile universe, the situation is subject to change. Yet, a president who a few months ago was accused of “always chickening out” on tariffs is emboldened and leaning into his protectionist instincts. After an initial market freak-out, Trump’s trade wars have had a milder impact on the US economy than first feared, encouraging him to double down on his “tariff man” persona.

That’s a troubling sign for Australia, which risks becoming collateral damage in Trump’s bid to squeeze more money from countries that export goods to the US. While Australia is not the focus of Trump’s trade ire, neither has it been given special favours. That is despite the countries’ alliance and the fact Australia has a rare trade deficit with the US.

Trump has an intuitive respect for great powers like China, Russia and India, but little regard for traditional American alliances, leaving middle powers like Australia in a tough position. The risk for Albanese is that he becomes a bystander to Trump’s trade whims rather than a dealmaker able to influence them.

The gold standard for dealing with Trump appears to be British Prime Minister Keir Starmer. After a successful meeting with Trump at the White House in February, Starmer announced a “historic trade deal” that would lock in a 10 per cent tariff rate for British exports to the US and cut the tariff on UK steel exports from 50 to 25 per cent.

As for Albanese and Trump, their relationship got off to a strong start with a friendly February phone call in which Trump committed to consider granting Australia an exemption to his steel and aluminium tariffs. Later that day Trump described Albanese as a “fine man”, another promising sign. Since then, there’s been nothing to crow about.

The mooted metals exemption never eventuated, and the pair did not have another phone call until after Albanese’s election victory in May. Albanese has not been invited to visit the White House and a planned June meeting on the sidelines of the G7 summit in Canada was cancelled when Trump returned early to Washington.

The pair’s first meeting is likely to take place in September – either on the sidelines of a Quad summit in India or the United Nations General Assembly in New York. That will be too late to influence Trump’s thinking on tariffs before his August 1 deadline. While Australians appear unfazed by Albanese’s ability to secure a meeting with Trump and dislike the US president, personal relationships matter in diplomacy. While meeting Trump carries risk – just ask Ukrainian president Volodymyr Zelensky – there’s upside as well. Dialogue matters as much with the US as it does with China.

If Australia is hit with a baseline tariff of 15 per cent, it will put us in a worse position than the UK and on par with Japan and the European Union, which recently sealed deals to slash their tariff rates to 15 per cent. Not a catastrophe, but nothing to celebrate.

If Trump were to go full bore and impose a 20 per cent rate, that would put Australia in a worse position than Japan, the EU and Indonesia – a terrible outcome given they all have big trade surpluses with the US and were originally threatened with tariffs ranging from 20 to 32 per cent.

The Albanese government’s offer of a reliable supply chain for critical minerals has fallen on deaf ears with the Trump administration, as have repeated declarations that tariffs are an act of economic self-harm. Perhaps Trump’s belief that he is responsible for the lifting of a ban on North American beef exports to Australia will have a diplomatic pay-off.

With Trump’s deadline fast approaching, there is no expectation among Australian officials that Australia will receive a special tariff deal. As for whether to expect a 10, 15 or 20 per cent baseline tariff rate, they don’t know. “We haven’t had that level of engagement,” a senior official says, pointing to a worrying lack of high-level communication between the Trump administration and Albanese government.

Australia is now in a position of waiting and hoping for the best when it comes to tariffs. It’s not the position a close ally and supposed special friend wants to be in.

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