Australia’s $4.4tn plan to avoid Trump tariff pain

A bevy of cashed up Australians worth trillions of dollars have headed to Washington DC with one aim in mind – to dazzle Donald Trump.

The Australians are in America, and they’re bringing pots of cash to impress the President.

The aim: to persuade Donald Trump not to impose 25 per cent tariffs on steel and aluminium exports which could come into effect next month. Or at least persuade him to remove them from Australia as quickly as possible should they be imposed.

On Tuesday, US time, Treasurer Jim Chalmers and Ambassador Kevin Rudd hosted US Treasury Secretary Scott Bessent – the man with a direct line to Mr Trump on all things money – in Washington DC.

The meeting was part of the first-ever Australian Superannuation Investment Summit which hits Washington and New York this week.

All in all, Australia’s super funds have $4.4 trillion sloshing around in them, one of the world’s largest retirement savings pools.

That money has to be invested somewhere. So, the current thinking goes, why not invest more heavily in the US given the current president is encouraging overseas nations to come to the US and threatening economic retaliation for those that don’t?

Mr Bessent, who has recently been in Kyiv trying to get a share of Ukraine’s mineral reserves, gave a positive – albeit noncommittal – four-word reaction following Tuesday’s Australian catch up.

When asked by Mr Rudd if Australia might avoid tariffs, Mr Bessent replied, “so far, so good”.

But, he added, he wasn’t the US Trade Representative who is charged with advising Mr Trump on tariffs.

Dr Chalmers said the conversation with Mr Bessent was “constructive” but cautioned that, “At the end of the day, this will be President Trump’s call”.

“Australia’s relationship with the United States is strong and enduring and one that benefits both sides,” he added on social media.

(L-R) Treasurer Jim Chalmers meets with US Secretary of the Treasury, Scott Bessent and National Economic Council Director Kevin Hassett, and Kevin Rudd in Washington DC. Picture: Michael Butcher

$4.4 trillion pot

The Super Summit is another carrot dangled in front of Mr Trump to nudge him towards some kind of Australian tariff carve out.

Big industry super fund names such as Australian Super, Australian Retirement Trust, Hesta, Hostplus, CareSuper, Cbus and Aware are all in attendance. Although retail super funds, like AMP, MLC and Colonial First State, are notably absent from the summit.

Those attending have seen a glossy video produced by one super fund with Aussie actors playing the roles of workers spruiking the possibility of Australian investments.

“Super for us and super for the US,” said one actor on the video.

“A pool of trusted capital from your long term ally,” extols another.

US President Donald Trump is being cagey on whether Australia will get a tariff exemption. Picture: Jim Watson / AFP

Super funds place members’ contributions in a range of investments – from shares to shopping centres, airports to office blocks.

Overall, a little under half of those investments are made outside of Australia simply because the Australian market is relatively small and there is a bigger range of investments and returns overseas.

Of the $4.4 trillion in super fund coffers, it’s thought around $220 billion could be placed in the US.

“The US is the largest and most dynamic economy in the world, which is why we’ve been investing with the US for three decades,” Super Members Council lead on strategy and insights Matt Linden told The Australian.

“There is a significant opportunity to invest”.

That could mean the super contributions of Australians bankrolling US roads, airports, data centres and power stations.

When you combine super funds with private companies, Australia already invests $1.2 trillion annually in America.

Firms including Visy, Rio Tinto, Atlassian and Woodside have substantial state side operations.

A big table to chat about big tariffs. Picture: Michael Butcher

Australia’s other ace

The other ace in Australia’s deck when it comes to the President is its trade deficit.

Mr Trump is vocally upset about countries that export more to the US than they import which he sees as “unfair” and grounds for economic punishment.

In Australia, it’s the other way around. Each year, we buy $28 billion more in goods from the US than it buys from us.

“We have a surplus with Australia. One of the few,” Mr Trump said the day he announced the tariffs.

“The reason is they buy a lot of aeroplanes. They’re rather far away and they need lots of aeroplanes”.

He said he would give “great consideration” to an exemption for Australia which exported almost $400m of the metals to the US in 2023.

Nonetheless, Mr Trump’s senior adviser Peter Navarro has taken aim at Australia’s aluminium industry casting doubt on whether Australia will get an exemption.

“Australia is just killing our aluminium market,” Mr Navarro told CNN earlier this month.

“What they do is they just flood our markets.

“President Trump says no, no, we’re not, we’re not doing that any more”.

That could suggest Canberra shaking off tariffs is going to take more than a cheery phone call between the PM and the president. Hence flashing the super cash.

Mr Chalmers has been careful not to explicitly link the super summit to tariffs, lest the US President still goes ahead with implementing them.

Rather he has said, Australian investment in the US is a long term play.

“Trade and tariffs will be part of the conversation, but not the whole conversation,” he said on the weekend.

On Tuesday, he added: “My task here in DC wasn’t to try and conclude that discussion (on tariffs), it was to try and inform it”.