Trump delivers ‘huge advantage’ to China with self-destructive tariffs

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Donald Trump’s self-destructive tariff blitz has forced Prime Minister Anthony Albanese and Opposition Leader Peter Dutton to acknowledge the elephant in the room they’ve so far been reluctant to talk about.

Australia may have got the better end of a bad deal with a “baseline” rate of 10 per cent on exports to the US, but that doesn’t mean we shouldn’t be bracing for impact – and not just economic, Peter Hartcher says, with Trump’s “Liberation Day” having political implications beyond Australia’s federal election.

Speaking with Samantha Selinger-Morris on The Morning Edition podcast, our international and political editor explains why Trump has delivered a massive advantage to China’s Xi Jinping on a silver platter.

To listen to the full episode, click the player below – or read on for an edited extract of the conversation.

Selinger-Morris: So Peter, tell us what has happened, what sort of tariffs has Donald Trump slapped on us?

Hartcher: Today – this is the big one – Trump announced tariffs on every country that sells goods to the US with a baseline, as he put it, minimum tariff of 10 per cent and then ranging up into 50 and 60 per cent for other countries.

Australia didn’t want a 10 per cent tariff put on all its exports to the US, but together with Britain, we have the lowest tariff rates applied to us. All other countries have higher tariff rates. Even some of America’s most intimate allies … Israel, for example, has a 17 per cent tariff applied.

Now, the [Australian] prime minister hinted this morning, without saying it outright, but that means it’s actually improved Australia’s relative competitiveness into the US, exporting to the US, relative to all other countries, except for the Poms … So we’ve gotten off lightly – in some ways it’s even an advantage that Australia has managed to secure. But that will be a cold comfort to some of the exporting companies and industries who will suffer because they will have lost 10 per cent competitiveness, measured against American producers in America – which, of course, don’t have a tariff applied to them.

Selinger-Morris: There’s some news out about China joining forces with North Korea and South Korea to create – quite extraordinarily – new trade paths with the EU. Does this provide a way out of this for us?

Hartcher: Australia already is a participant in a web of international agreements, bilateral as well as multilateral, and there will be more of that everywhere around the world.

Australia is one of the freest and most active trading nations in the world, and Australia will be a part of that. No doubt about that … this has handed a huge political advantage and geostrategic advantage, notably to China, which can now say to the world, “Look, those horrible Americans are doing terrible things to you. We’re stable. We’re buying. Come, come and sell to us.” So it’s a big political favour that Donald Trump has done to China.

Beyond the tariffs and beyond the trade is the greater question about the role of the US in the world, and as an ally to Australia and to all US allies … It wouldn’t matter if the tariff were 1 per cent or 500 per cent, the principle that’s been breached here is that Australia has a free trade agreement with the US. Donald Trump has breached that, as well as breaching World Trade Organisation obligations, which the US actually created after World War II … he’s walked away from that. He’s torn up, effectively, the free trade agreement with Australia.

The lesson from that is, this is a man, now a country, that will not pay heed to any treaty agreement, commitment or obligation, and that cuts to defence relationships. It cuts to all relationships. This country on which we have long relied is no longer reliable, and we have to stand ready for it to break any agreement or treaty; no matter how solemn we might think it is, it’s nothing to him, and we need to brace for that.

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