Election 2025: Business leaders sound alarm on fragile economy as Trump ramps up trade war
Business leaders fear the nation’s fragile economy and weak productivity will be exposed by a global recession fuelled by Donald Trump’s trade war.
Business leaders fear the nation’s fragile economy and weak productivity will be exposed by a global recession fuelled by Donald Trump’s trade war, as the US President threatened a “major tariff” on pharmaceuticals and punished Beijing with 104 per cent tariffs on Chinese imports.
Amid concerns of more stockmarket pain for Australians, Jim Chalmers convened an emergency meeting of financial regulators in Sydney and spoke with Future Fund chair Greg Combet and ASX chair David Clarke and chief executive Helen Lofthouse.
Ahead of a meeting between the Treasurer and the Business Council of Australia board on Thursday, the BCA and 19 employer groups representing the gamut of the nation’s industries have joined forces to lobby both Anthony Albanese and Peter Dutton to remove economic handbrakes and unshackle the private sector to drive growth, jobs and investment.
The industry groups – representing builders, farmers, miners, gas companies, small business, manufacturers, tourism operators, developers, airport operators and retailers – wrote to the Prime Minister and the Opposition Leader warning “private sector growth is weak, with many underlying issues – particularly productivity”.
BCA chief executive Bran Black said “global uncertainty driven by US tariffs and other world events only intensifies the need to make our economy more resilient and competitive”.
Mr Black, who represents Australia’s biggest employers including the big four banks, Woolworths, Coles, Qantas, BHP and Woodside, said both parties needed to “deliver a long-term economic plan to turbocharge growth to generate prosperity for all Australians”.
Dr Chalmers’ meeting with Reserve Bank governor Michele Bullock, ASIC chair Joe Longo, APRA chair John Lonsdale, Treasury secretary Steven Kennedy and ACCC chair Gina Cass-Gottlieb followed Mr Trump promising to impose a “major tariff on pharmaceuticals”.
Australia’s pharmaceutical exports to the US, valued at about $2bn, have been singled out by Trump administration officials who claim the Pharmaceutical Benefits Scheme undermines US drug companies’ intellectual property.
Dr Chalmers said after the Council of Financial Regulators meeting that Australia was “well placed and well prepared to confront extreme uncertainty and volatility in the global economy”.
The meeting focused on the global and domestic economic outlook and sharemarket volatility. “We’re working closely with the financial regulators and we’re confident about Australia’s ability to respond to heightened global uncertainty, but we’re not complacent,” the Treasurer said.
The Council of Financial Regulators also issued a statement saying it was “closely monitoring” international economic developments. “In discussing the evolving outlook, the council expected that a period of uncertainty would likely persist for some time,” the statement said. The council added there had been an increase in global financial market volatility, but that the Australian financial system was strong and resilient.
Opposition Treasury spokesman Angus Taylor was granted meetings with top RBA figures on Wednesday including Ms Bullock, financial markets assistant governor Chris Kent and economic assistant governor Sarah Hunter.
Mr Taylor said the Coalition had been “proactive on how we address these issues and are calling on the government to support our requests for briefing”.
“We are in an uncertain economic environment and we cannot afford complacency. Strong and decisive action is needed to secure Australians’ jobs, retirement savings and hopes of home ownership,” he said.
“The Coalition will ensure we are ready to act on day one to deliver the strong economic management Australians expect to preserve Australians’ wealth and ensure Australia is well positioned to weather these economic shocks.”
As Mr Albanese and Mr Dutton trade barbs ahead of the May 3 election over who will be stronger in standing up to the US President, Mr Trump on Wednesday described how foreign leaders were “kissing my ass … they are dying to make a deal”.
Speaking to a group of Republicans on Tuesday evening, Mr Trump said world leaders pleading for tariff relief were saying: “Please, please sir, make a deal, I’ll do anything, sir.”
Business groups pleaded in their joint letter for urgent action from Labor and the Coalition to unleash the private sector.
“In the last year alone, businesses paid $143bn in company tax. That’s enough to pay for all federal spending on health and aged care. Yet we have one of the least competitive tax systems among comparable nations,” the letter reads. “We’ve burdened our economic engine room with countless new pieces of regulation and red tape. And the prosperity of all Australians suffers while our productivity lags.”
With Dr Chalmers calling on the private sector to take the lead after Labor’s massive spending and public service growth, the business groups are demanding an “agenda that makes Australia a more attractive destination for investment and an easier place to do business so that we can increase living standards”.
“We know that the private sector employs six out of every seven workers. We know that about 80 per cent of Australia’s final economic output comes from businesses of all sizes. We know that businesses, and the people they employ, account for the bulk of tax revenue that funds our health and security” the groups wrote.
The demands came as the global market meltdown sparked fresh tensions within Trump’s inner-circle, with Elon Musk deriding the President’s senior trade adviser, Peter Navarro, as “a moron” and “dumber than a sack of bricks”.
The attack followed Mr Navarro declaring the Tesla boss was “not a car manufacturer” but “a car assembler” who relied on imported parts. “If you go to his Texas plant … the batteries come from Japan and from China, the electronics come from Taiwan,” Mr Navarro said.
Mr Musk hit back at Mr Navarro on his X social media network.
“Navarro is truly a moron. What he says here is demonstrably false,” Mr Musk said, referring to a clip of Mr Navarro saying Mr Musk wanted “cheap foreign parts” for his electric cars.
He dubbed the trade adviser “Peter Retarrdo” and goaded him to “ask the fake expert he invented, Ron Vara” – referring to a fictional pundit Mr Navarro quoted in his books whose name is an anagram of his own.
White House press secretary Karoline Leavitt responded to the spat, saying: “These are obviously two individuals who have very different views on trade and tariffs. Boys will be boys. We will let their public sparring continue.”
On China, Ms Leavitt accused Beijing of making a mistake in choosing “to retaliate and try to double down on their mistreatment of American workers”.
“President Trump has a spine of steel … the Chinese want to make a deal, they just don’t know how to do it,” she said.
US Trade representative Jamieson Greer on Wednesday defended the administration’s tariffs on Australia in the face of criticism by Democratic senator Mark Warner. Mr Warner said the tariffs were insulting to Australia and undermined the AUKUS pact.
Mr Greer told a Senate hearing “Australia has the lowest rate available under the program”.
The Australian can reveal the BCA, supported by the Council of Small Business Organisations, will hold the final economic debate of the campaign, allowing employers to ask questions of Dr Chalmers and Mr Taylor.
Trade Minister Don Farrell was due to meet his EU counterpart Maros Sefcovic on Wednesday night to reopen talks on a potential Australia-EU free trade agreement, after negotiations on a deal collapsed in late 2023.
Senator Farrell said Australia wanted to do a deal with Europe, “but only one that gives Australia new, commercially meaningful market access, in particular for Australian agriculture”.
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