America’s massive profit at Australia’s expense revealed as trade war with China escalates

The US is one of Australia’s closest allies and says it has our back. But behind the scenes, America is profiting big time from our misfortune.

Australia’s devastating trade war with China has been a crushing blow for many industries, and the wider economy as a whole.

And while our allies have publicly backed us, behind the scenes, they’ve quietly benefited from Australia’s misfortune.

The US is taking advantage of Australia’s trade war with China.

That’s according to an eye-opening new report from the Australia-China Relations Institute (ACRI) based at the University of Technology Sydney, which has detailed a string of harsh economic realities facing Australia as a result of our spat with China.

Penned by director James Laurenceson and project and research officer Thomas Pantle, the damning report reveals Australia’s exports across 12 key commodities impacted by Beijing’s sanctions – such as coal, barley, beef, timber, lobster and wine – plummeted by a staggering $17.3 billion in the first nine months of 2021, compared with 2019.

But at the same time, our closest “strategic friends” – led by the US, but also including Canada and New Zealand – have enjoyed a windfall, with US exports jumping by $A6.3 billion, Canada’s by $A1.5 billion and New Zealand’s by $A1.1 billion.

In other words, while our partners have loudly supported us on the world stage, they’ve had no qualms when it came to muscling in trade-wise.

“Australia’s strategic friends have offered useful rhetorical support for Australia’s predicament,” the report states.

“But outcomes demonstrate a parallel commitment to advancing their own commercial interests, including by snapping up lost Australian sales and trading more with the People’s Republic of China (PRC).”

And the betrayal goes a step further, with our allies also failing to buy from us in our time of need.

America has profited the most from Australia’s ongoing stoush with Beijing. Pictures: Greg Baker and Nicholas Kamm/AFP

“Expressions of solidarity with Canberra have also not extended to strategic friends significantly stepping up their purchases of Australian goods disrupted by the PRC to help mitigate costs,” the report continues.

For example, from January to September this year, sales of Australian wine to China dropped by a massive $US480.5 million ($A675 million), compared with 2019.

But surprisingly, US purchases rose by just $US7.1 million ($A9.9 million).

“For Australia’s wine producers, market diversification is as difficult, long and costly a process as ever,” the report explains.

“Nor has there been a broader reorientation of Australia’s trade patterns towards countries with which Australia has shared values, such as a commitment to democracy.

“Comparing January-September 2021 with 2019, global markets have redirected Australia’s exports of goods like coal to Turkey (up $US191.4 million, $A269 million), barley to Saudi Arabia (up $US520.4 million, $A731 million) and cotton to Vietnam (up $US350.5 million, $A492 million) – other countries where an alignment with Australia’s values is not clear.”

‘This is not normal’

Speaking to news.com.au, Prof Laurenceson stressed that while “the numbers are quite brutal”, it in no way undermined Australia’s crucial alliance with the US.

“This should not surprise anyone, and it certainly does not surprise Australian businesses,” he explained.

“This is the real world – you can be great mates with your strategic and security allies, but at the same time, producers from those countries can be your biggest commercial rivals.

“Nobody is saying don’t work with the US … nobody is talking down that alliance, because this is precisely what was expected – that we would end up bearing the costs.

Victorian wine exports are down 33 per cent since China whacked tariffs on Aussie wine, with Yering Station winery owner Darren Rathbone among many affected by the spat. Picture: Tim Carrafa

“We’re not suggesting the US is doing something devious here – Washington is not going to tell its producers ‘please don’t take advantage of these opportunities because we want to help Australia’ – that’s a joke and it’s not going to happen, the costs are borne by Australian producers, and Australian producers alone.”

Concerningly, Prof Laurenceson said he didn’t believe our current predicament was inevitable, and that instead, it was the consequences of our own actions.

“Plenty of countries have challenges in their relationship with China, but no other country has been hit by the range of trade disruptions Australia has at the moment,” he said.

“This is not normal, and I think with effective diplomacy, we didn’t have to be in this situation.

“People put up stupid binaries and say, ‘What do you expect, that we shouldn’t stand up for our values?’ Every country stands up for its values, but Australia was beating its chest and running ahead of the rest, and that poor diplomacy got us into this predicament.”

Sadly, Prof Laurenceson said he didn’t expect the trade war to end any time soon, as both China and Australia appeared to be unwilling to back down.

ScoMo the ‘root cause’ of deterioration

Unsurprisingly, the report’s findings were picked up by Chinese Communist Party mouthpiece the Global Times, which argued in a recent article that the “disappointment” felt by Aussie businesses regarding the trade war was not just levelled at China, but the Morrison government too.

“They must be clearly aware that the root cause of the deterioration of China-Australia relations does not lie in China, but lies in the Morrison administration, which has repeatedly trodden on China’s red line on issues concerning China’s core interest,”

“It’s believed they may have more dissatisfaction toward their own government.

“ … the fact is that Australia’s constant provocations on China are the root cause of the deterioration of China-Australia ties. And China’s responses have just been a rational reaction to Australia’s provocations.”