Chalmers calls emergency economy meeting to deal with Trump tariff dump

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The nation’s top economic officials have been summoned to an emergency meeting to respond to the financial chaos unleashed by Donald Trump’s tariffs, as the United States and China escalate their threats of a vicious trade war that would inflict collateral damage to the Australian economy.

Trade Minister Don Farrell will also speak with the European Union’s top trade official on Wednesday in a bid to revive stalled negotiations on a European free trade pact, part of a broader push to open up new markets for Australian exporters.

Reserve Bank governor Michele Bullock and Treasurer Jim Chalmers will meet with other high-powered finance regulators at an emergency meeting to deal with global financial turmoil. Credit: Alex Ellinghausen

Opposition Leader Peter Dutton ratcheted up his economic rhetoric by claiming the economy was heading into a recession under the Albanese government, prompting Treasurer Jim Chalmers to accuse him of “reckless” alarmism before the May 3 election.

Beijing vowed to “fight to the end” to defend its economic interests, accusing the US of “blackmail” after Trump threatened to impose a further 50 per cent tariff on Chinese imports in response to its vow to implement tit-for-tat imposts on US goods.

Chalmers will on Wednesday lead a snap meeting of the council of financial regulators, a high-powered body that includes Reserve Bank Governor Michele Bullock and Treasury Secretary Steven Kennedy, to discuss how local and global markets are being affected by the volatility caused by Trump’s “Liberation Day” tariffs.

Dutton warned Australia was headed for recession. Credit: James Brickwood

Australian Securities and Investment Commission Chair Joe Longo, Australian Prudential Regulation Authority Chair John Lonsdale and Australian Competition and Consumer Commission Chair Gina Cass-Gottlieb will also attend the meeting.

“These escalating trade tensions are casting a dark shadow over the global economy but Australia’s robust economy and budget puts us in good stead,” Chalmers said, as Australian consumer confidence slumped in the wake of Trump’s tariffs.

“We’re working closely with the regulators and financial institutions to ensure that everything possible is being done to safeguard Australians from this global volatility.”

Asked whether Australia was heading into recession, Dutton said on Tuesday: “It is under Labor.”

Predicting that the US was likely headed into recession, dragging the global economy down with it, Dutton said that “huge tsunami waves will hit our shores in no time at all”.

“With his reckless comments on a recession, Peter Dutton has proven again today why he is the biggest risk to Australia’s economy,” Chalmers said.

Treasury modelling released this week showed the Australian economy would suffer a 0.2 percentage point hit to growth but would not suffer a recession.

Farrell said Trump’s decision to impose a 20 per cent tariff on all imports from the European Union had reignited European interest in striking a free trade deal with Australia after negotiations collapsed in 2023.

“The world has changed and we should take advantage of the new world order to have another crack at an agreement,” Farrell said in an interview ahead of his call with EU Trade Commissioner Maros Sefcovic.

“The opportunity is there and we can grab it with both hands.”

The government said at the time that negotiations fell apart because Europe had not agreed to offer enough access for Australian beef, sheep, dairy and sugar exporters.

Farrell said Australia would stand strong on its previous demands, while pushing back on European calls for Australian producers to stop using names such as feta, halloumi and prosecco.

In a separate speech on Tuesday to the Australia China Business Council, Farrell said that, if re-elected, the government would seek to strike a free trade deal with India as part of a bid to diversify Australia’s trade ties.

“As we face global uncertainties spurred by protectionist measures, including US tariffs, we are redoubling our efforts to strengthen relationships, diversify and find new opportunities,” he said.

Prime Minister Anthony Albanese has been unable to secure a phone call with Trump to present Australia’s case for a tariff exemption, despite having an open request for a discussion since early March.

“We’ll continue to engage constructively with the US administration,” Albanese said.

Former trade minister Andrew Robb said Australia should respond to Trump by intensifying talks with countries around Asia to remove trade barriers and lift growth, given the threat of a recession in the region from the American tariffs.

“We can turbocharge a lot of the opening up that’s taking place in our region,” said Robb, who led trade deals with Japan, South Korea and China as a Liberal cabinet minister a decade ago.

Robb said Australia should stand up for free trade, should not make concessions to Trump over the 10 per cent tariffs imposed last week and respond by making an even bigger effort to strike deals with the European Union and others.

The best approach, he said, was to broaden two existing trade alliances – the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership (RCEP) – and one day bring them together. Australia, Japan and others are in both groups, while China is in RCEP and the US is in neither.

The closely watched Westpac-Melbourne Institute measure of consumer sentiment fell 6 per cent in April – a six-month low – with confidence down by 10 per cent among those polled after Trump’s tariff announcement.

“The scale and breadth of tariff increases, which included a 10 per cent tariff on Australian goods, came as a major surprise, triggering a sell-off in global financial markets,” Westpac’s head of macro-forecasting, Matthew Hassan, said.

“With the situation still deteriorating, there is a clear risk of more significant sentiment declines in the months ahead.”

Albanese, Chalmers and Finance Minister Katy Gallagher have made pointed references to financial market predictions that the Reserve Bank will repeatedly cut official interest rates this year, beginning next month, as it seeks to offset the fallout from Trump’s tariff war. But they have stopped short of telling the bank to slash rates.

The federal budget revealed a $42.1 billion deficit in the coming financial year, while gross government debt is expected to reach a record $1 trillion by mid-2026.

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