Stephen Loosley: US tariff hike may spark trade war with China

Stephen Loosley says Donald Trump’s election could spark a trade war if he imposes tariffs on Chinese imports.

Stephen Loosley, chairman of the Australian Strategic Policy Institute. Picture: Renee Nowytarger

Donald Trump’s election as US president could spark a trade war if he follows through on threats to impose tariffs on the imports of Chinese goods to the US, says former Labor senator Stephen Loosley.

Mr Loosely, who is chairman of the Australian Strategic Policy Unit in Canberra and has had close ties with the US, said the rise of Mr Trump and his anti-trade policies meant the post-war pursuit of global trade liberalisation was now “dead”.

He said Trump’s election would send shockwaves to politicians throughout the world who were in favour of free trade.

It was not known whether he would follow through on his threats to impose tariffs of around 35 per cent on Chinese goods coming into the US.

“If he did, it could spark a trade war and be ruinous for the global economy,” said Mr Loosley.

“There is now going to be a major roll-back of the agenda for trade liberalisation.

“The consensus that it is a good idea to continue to open up world trade is now shattered.”

Mr Trump’s rise has followed his strong criticism of the North American Free Trade Agreement and promises to impose heavy ­tariffs on goods imported from China.

It has also included promises to bring back manufacturing industry to the US.

Mr Loosley said the proposed Trans-Pacific Partnership deal with 12 Pacific countries including Australia was now “dead” and the proposed US trade deal with Europe was also off the cards.

Mr Trump’s unexpected success would mean any politician would now think twice about proposing new free-trade deals.

“If you take the US out of the equation it is hard to see that there will be any more multilateral trade liberalisation,” he said.

“There could still be bilateral deals but the problem now is that any politician who is proposing a new trade deal will have the US election result hanging like a cloud over their shoulder.”

Mr Loosley said there would be a new era of uncertainty as the world waited to see what the new president would do.

He said Mr Trump’s rise had been a surprise to many political, business and opinion leaders.

“We have no real idea of what the Trump policy framework would look like,” he said.

Niels Marquardt, the chief executive of the American Chamber of Commerce in Australia, said Australians needed to realise that the president was subject to the checks and balances of the US Congress even if it was controlled by the same political party.

“The US is the least likely country to come under the sway of any one individual because of the checks and balances in the system,” Mr Marquardt said.

“There is no reason to panic.

“Business between Australia and the US will go on as usual. We are not on the edge of a precipice.”

But he said a Trump election would raise issues of protectionism given his comments during the election. There is nothing in Mr Trump’s comments during the election campaign to suggest there will be any concerns about Australia doing business with the US.

“What is concerning is some of the comments he has made on protectionism. It may have played out well in the election, but it remains to be seen whether he would do anything different as president,” Mr Marquardt said.