Donald Trump the tariff man returns – and so does chaos
The lure of success makes Donald Trump only more dangerous – to the world, to America’s real interest, to the international order and, of course, to Australia.
The tariff man is back – emboldened, bullying, indulgent and reckless. Donald Trump, infused by his recent political successes, now leverages his momentum to renew his assault on the world trade system, punishing friend and foe alike, in a US administration riddled by chaos and a kingship cult.
The lure of success makes Trump only more dangerous – to the world, to America’s real interest, to the international order and, of course, to Australia. He is capricious, unpredictable and stamps himself as the untrustworthy partner.
Consider the most recent week of unremitting daily chaos: Trump threatening higher US tariffs up to 40 per cent on a range of countries in near-identical letters; repeating his technique of extending a deadline to bludgeon concessional trade deals; cavalier revelations conceding the actual tariff levels are largely arbitrary and subjective; threats on more sectoral protection with a 50 per cent slug on copper imports and a ludicrous 200 per cent tariff threat on pharmaceuticals; complete lack of respect for allies, with Japan and South Korea the main targets in the firing line; and open abuse of the trade power, with Trump announcing a 50 per cent tariff on Brazil because Trump won’t tolerate former president Jair Bolsonaro being on trial for allegedly promoting a coup.
Whether Trump pulls the trigger on his tariff threats remains to be seen. He is a master of intimidation and bluff. Perhaps he doesn’t even know. Stung by the TACO label – “Trump Always Chickens Out” – he seems to oscillate between muscular threats and blustering retreats.
Trump, it seems, changed his mind and decided to extend the deadline for his so-called reciprocal tariffs from July 9 to August 1 on advice from Treasury Secretary Scott Bessent that he could get more trade deals with more time – notably with the EU and India among others.
White House press secretary Karoline Leavitt – a wonderful interpreter of Trump’s mind – said of his view on trade: “He is literally looking at the map and looking at every country on the planet and seeing where they are ripping off the American people.”
Trump dispatched the letters with typical bravado, saying: “As far as I’m concerned, we’re done.” He intimidated dozens of leaders to make deals, saying he decided on the numbers himself: “The deals are mostly my deals to them. We’ve picked a number that’s low and fair.” This is how the US President now reshapes world trade.
Trump quickly ran on pharmaceuticals, setting off an Australian tripwire since our exports to the US, spearheaded by CSL, are worth $2.2bn, with obvious risks for our industry and possible impact on the Pharmaceutical Benefits Scheme. Ever generous, Trump offered an 18-month grace period to enable companies to relocate their pharmaceutical supply lines.
Jim Chalmers said Australia would defend the PBS against Trumpian intimidation. As usual, with Trump’s disruptive lurch to global chaos, the Coalition blamed Anthony Albanese, with opposition trade spokesman Kevin Hogan saying the pharmaceutical issue was more evidence of the Prime Minister’s failed relations with America. Their claptrap never ends.
The Coalition has learnt nothing from its election rout. It is incapable of addressing the strategic havoc being wrought by Trump or how Australia should respond, locked into its hopeless blame game against Australia for the consequences of Trump on this country. The public won’t buy this line any more than it did at election time.
No one knows what Trump will do next. He is a disastrous contradiction – vastly exaggerating America’s influence in the world while determined to reduce the scope of its power. Trump is the ultimate populist in an age of populism, but the problem for populists is they cannot escape the consequences of their decisions.
The source of the crisis lies in Trump’s core beliefs and prejudices. He misreads the impact of higher tariffs, thinking this will empower the US economy and industry.
He doesn’t care that higher tariffs weaken the bonds of mutual national interests and discredits the US. He subscribes to the delusion that US economic withdrawal means a stronger America when it really means the opposite.
He talks about cutting spending but brings down a “big beautiful bill” that boosts the debt by between $US3 trillion and $US4 trillion. He pretends to champion ordinary people when his bill delivers $US1m on average to the richest 0.1 per cent of American families, partly financed by cutting healthcare to upwards of 11 million people. He assaults the independence of the US Federal Reserve, brands chairman Jerome Powell a “total and complete moron”, threatens to create monetary policy chaos by prematurely announcing a successor to Powell and calls for interest rates to be cut to 1 or 2 per cent, in current circumstances an act of financial folly. Powell, meanwhile, warns the Fed would have lowered rates more quickly if not for Trump’s tariffs.
Each of Trump’s decisions and stances only weakens America against China. Around the world today is a great hissing noise – it is the withdrawal of US power and influence. It is heard from Europe to Asia.
Returning after a recent visit to the US, the debate in Australia seems conducted in a bubble from another planet. The problem we face, almost daily, is Trump, not Albanese. This is obvious, not hard to grasp, yet escapes much of the public discourse.
Instead of a rational assessment of what Trump constitutes – occasionally good but mostly bad – the right-wing zeitgeist is to blame Albanese because it cannot come to grips with the scale and magnitude of Trump’s folly and defaults into pathetic excuses for him.
Our Prime Minister’s limitations are well known. His political approach to Trump has serious flaws. The far bigger point, however, is that Trump is a danger to the world – in trade, security, interdependent and alliance partnerships. The more he succeeds, the worse it gets. Trump has no interest in a US-led global order, preferring instead an America that operates as a nationalistic, selfish hegemon that incessantly complains about being ripped off. It is a Little America mindset in the sad disguise of a “Make America Great Again” boast.
And this view doesn’t overlook Trump’s successes – getting the Europeans to spend more on defence and his military attack on Iran’s nuclear sites. Trump, however, thinks America won’t pay a price but it’s happening already.
With Israel a conspicuous exception, more nations and people are disenchanted with the US, hedging their bets, engaged in a mixture of accommodation, flattery or avoidance, but settling on the idea of US unreliability. Leaders won’t trust Trump.
It’s not happening overnight because US power, clout and its economic footprint remains strong and innovative. But the trend is being set. The harmful consequences of Trump dominate every Washington conversation while – who would believe – the failures of Albanese seem to hardly rate a mention.
By attacking trade, the Fed, boosting US debt levels and displaying contempt for allies, Trump undermines the foundations of America’s long era of global success.
The further reality is the dysfunctional nature of the Trump administration. There is no functioning cabinet. There is little functioning agreement across wide areas of external policy. Different officials provide different answers to core policy issues being raised by allied governments. There is no properly functioning national security system. Trump operates a bizarre divine right of kings model where his cabinet minions compete to please him. To be fair, Bessent does seem to exercise some influence.
The Wall Street Journal reported on this week’s tariffs that Trump “argued privately he was riding a wave of momentum from his signing of the “One Big Beautiful Bill” and his bombing of Iran and wanted to ride those perceived wins to victories on trade policies”.
Every morning at 6am the Labor government wakes up to discover the latest bluster from Trump while the Coalition busies itself preparing to blame Labor for the latest Trumpian trade atrocity.
Trump’s dominance in US politics is likely to be more enduring than orthodox analysis would predict. His projection of power and strength – even some of his brutal policies that are apparently unconstitutional – consolidate much of his base.
The Democratic Party looks demoralised and disoriented, unsure of how to combat Trump, lurching to the left, instinctively opposed to everything Trump does, almost turning into a left-wing populist version of Trump but without any iconic figurehead.
Obviously, the sooner a Trump-Albanese meeting the better. It is an embarrassment that Albanese is visiting China again before he sits down with Trump. Albanese continues to send the wrong signals on defence spending and this merely invites retaliation from the Trump administration.
Getting the optics right on his China visit will demand skill of an extremely high order that will test Albanese’s ability to get the balance right between the US and China.
Any idea that an earlier Trump-Albanese meeting would have secured trade breakthroughs is a fantasy. Forget any notion that the 10 per cent tariff applied to Australia will be altered. Indeed, the trade differences are, in effect, cemented: Albanese criticises Trump’s tariffs saying they will hurt America and are unjustified on Australia – right on both counts.
The two leaders will meet when Trump, not Albanese, decides. They will meet when it suits Trump and his priorities. Australia is not a Trump priority – that might be a good or bad thing. Trump seems not to feel the hysterical alarm about the relationship being conveyed daily by the Coalition and the centre-right in Australia. Albanese, unsurprisingly, is ready to travel to wherever is required for a meeting.
The main goals for Albanese in such a meeting are establishing a personal relationship with Trump and securing a presidential in-principle commitment to the AUKUS submarine agreement. A meeting will be important in its own right and perhaps, even more so, in terms of perceptions. The focus will fall further on sectoral tariffs. The government needs to be smart enough to both protect the PBS and take the advice from CSL chairman Brian McNamee to accelerate US medicines into Australia by having faster approval and price mechanisms.
The federal Treasurer said: “The US accounts for less than 1 per cent of our copper exports. Much more concerning are the developments around pharmaceuticals. Our pharmaceutical industry is much more exposed to the US market.
“We see the PBS as a fundamental part of healthcare in Australia. And that’s why we’re seeking – urgently seeking – some more details on what’s been announced.”
On AUKUS, the Australian diplomatic position is obvious – we expect the US to honour the agreement and the spirit of the agreement. It is structured to deliver benefits to both nations. There is strong support for AUKUS across most of the American system – the congress, the State Department, most of the Pentagon and most of the national security establishment – partly a tribute to the work of Kevin Rudd who, like virtually every ambassador in Washington, doesn’t have a personal relationship with Trump.
The Trump administration needs to beware of infringing Australian sovereignty. That would constitute its worst mistake dealing with Australia. This could happen in one of two ways: putting pressure on Australia to restrict its trade or economic relationship with China, since no Australian government would tolerate such a shift; and altering the current arrangement for the sale of Virginia-class submarines by imposing new conditions on Australia’s control, with the idea even being floated that Australia give a guarantee about its submarines being involved in any future US-China conflict over Taiwan – an obvious step too far.
Trump’s treatment of Japan and South Korea – with tariffs proposed at 25 per cent – reveals his focus on tariff punishment exceeds any commitment to them as vital US allies. But the price impact for consumers would be severe since they constitute nearly 9 per cent of all US imports.
The Wall Street Journal reported the average effective US tariff rate when Trump arrived in office was 2.4 per cent but had now reached 15.6 per cent.
It says Trump’s tariffs will raise an estimated $US300bn in border taxes from the productive economy and he manifestly wants to go far higher.
Trump and his backers are convinced his policies will generate a growth surge and a new “golden age” for the US. His tax policies are geared for investment and growth. But assessments of his economic and fiscal policies are deeply polarised.
Elon Musk said of Trump’s big beautiful bill: “The bill will cause immense strategic harm to our country.” In the Free Press, economist Tyler Cowen said it is “one of the most radical experiments in fiscal policy in my lifetime” and economic commentator Kyla Scanlon said: “While the US cuts taxes in the hope that it will create new industry, China continues to directly invest in advanced manufacturing, critical minerals and industrial capacity. The structure of the law will likely put the US even further behind, with cuts to renewable energy and a prioritisation of the past over the present.”
More Coverage
