‘Wouldn’t be immune’: Australia braces for Donald Trump’s economic plan

Donald Trump has told Anthony Albanese that Australia and the US will be “perfect friends”. Now Jim Chalmers has revealed what his presidency will mean.

Australia should expect upward pressure on inflation and a decline in exports under US president-elect Donald Trump’s plan to impose steep tariffs on Beijing, amid warnings the country would not be immune from any ensuing trade war.

Treasurer Jim Chalmers will move to allay fears about the likely “small” direct economic impacts of Mr Trump’s election pledge to hit China with tariffs of 60 per cent and other imports with a 10 per cent hike, in a speech on Monday insisting Australia will be able to “mitigate” some of the flow-on effects of the incoming president’s as-yet unconfirmed proposal.

It comes as new details of Anthony Albanese’s first call to Mr Trump have emerged, with Sky News revealing the president-elect told the Prime Minister last Thursday “we are going to be perfect friends”.

Speaking at the Australian Institute of International Affairs, Mr Chalmers will provide some insights gleaned from Treasury modelling on different trade and tariff policy scenarios commissioned ahead of the US election.

The Treasury is bracing for different scenarios that might play out when Donald Trump becomes president. Picture: AP Photo/Evan Vucci

“Treasury’s analysis demonstrated that we should expect a small reduction in our output and additional price pressures, particularly in the short term,” he will say.

“But specific features of our economy – like a flexible exchange rate and independent central bank, would help mitigate against some of this.”

However, Mr Chalmers will warn that globally, the impact of some tariff scenarios would be “much more substantial”.

“The timing of this, and the responses and ramifications that might follow – what economists call second-round effects – are difficult to predict,” he will say.

“But we wouldn’t be immune from escalating trade tensions that might ensue.”

Insisting Australia was “ready for either outcome” in the US presidential race between Mr Trump and outgoing Vice President Kamala Harris, Mr Chalmers will say in addition to economic modelling there was also “diligent” diplomatic work done in Washington DC to prepare for any eventuality.

Federal Treasurer Jim Chalmers said tariff scenarios could have a substantial global impact. Picture: NewsWire / Martin Ollman

Mr Chalmers will praise Australia’s ambassador to the US Kevin Rudd in helping him build and deepen connections “across the political aisle,” including introducing him to Scott Bessent, who is seen as the leading candidate for Treasury Secretary in the next Trump White House.

Mr Chalmers will say he and Mr Bessent had a “long discussion” after dinner at the Ambassador’s residence a little over two weeks ago.

“Getting more than an hour with a key member of President Trump’s economic team 12 days before the election was a very valuable opportunity,” he will say.

“We spoke about monetary policy, inflation, and tariffs and trade.”

Mr Chalmers said Labor expected the incoming US administration would “bring a different suite of policies”.

“And we are confident in our ability to navigate that change, as partners,” he will say.

“Nobody should underestimate our ability to make it work.

“We are well placed and well prepared.”

Originally published as ‘Wouldn’t be immune’: Australia braces for Donald Trump’s economic plan