Australian CEOs are confident and optimistic about the economy and Trump, an EY survey has found

Australia’s strong relationship with the US should lead to minimal disruption by Donald Trump’s trade policies, EY Oceania boss David Larocca says.

EY Oceania chief executive David Larocca.

Australia’s trade relationship with the US is likely to result in minimal impact or inflationary pressures as a result of US President Donald Trump’s trade policies, says EY Oceania chief executive David Larocca, as bosses become more optimistic about 2025.

Mr Larocca told The Australian there was greater optimism on all fronts – globally, locally and for individual sectors – from Australian chief executives looking to deploy capital and expand their businesses this year.

Mr Trump has pledged to impose tariffs of 60 per cent on imports from China and slap tariffs on Canada and Mexico as he looks to address what he sees as unfair trade practices, reduce trade deficits and encourage manufacturing jobs to the US.

“Sentiment is positive from a CEO perspective (around Trump), but they’re also aware of the potential geopolitical risks,” Mr Larocca said.

“From a broader perspective, our trade, Australia’s trade relationship with the US could result in minimal impact or inflationary effects from redirected trade due to President Trump’s policies.”

“Everything he has said publicly is focused on bigger markets, but we’ve got to remember that bigger markets also have a flow-down impact on us. Anything that happens in China ultimately drips to an effect on Australia, given our very strong trading relationships with China as an example.”

The tariffs have the potential to damage the international economy – as well as the US economy, according to market watchers. While Australia, which has huge exposure to the Chinese economy, could suffer collateral damage in any US-China trade war, Mr Larocca said the impact was likely to be minimal for the country.

Mr Larocca said the Trump bump on markets in 2024 was closely watched by a number of listed companies, and while there was confidence around his pro-business policies there was still some way to go.

“The recent moderation in inflation and clarity from the US presidential election have clearly improved outlooks, while anticipation of interest rate cut is helping consumer confidence,” he said. “CEOs have the certainty of who was elected president. The second piece of certainty, which has got a little way to go, is what Trump’s policies are actually going to be, particularly the cross-border related policies.”

Chief executives surveyed are so far unperturbed by President Donald Trump’s rhetoric. Picture: Getty Images

The EY CEO Outlook Pulse Survey (January 2025) surveyed 60 Australian CEOs from five industries and found 83 per cent were optimistic about the global outlook for the coming year, up from 60 per cent in September.

It also found that 73 per cent of CEOs feel positive about the Australian outlook, an increase from 66 per cent.

The findings come as economists expect the Reserve Bank to reduce interest rates as soon as next month, despite annual headline inflation up from 2.1 per cent to 2.3 per cent in the 12 months to November 30, according to the Australian Bureau of Statistics.

Mr Larocca said it was surprising so many bosses were optimistic given the challenging socio-economic and geopolitical environment and persistent inflation.

“We’ve got the second Trump presidency with changes afoot there across immigration tax, tariff policies. We’ve got ongoing global conflicts, and it’s an election year,” he said. “We’re also starting to see that CEOs and exec teams have become more match fit at navigating uncertainties as a result of the pandemic.”

The survey also showed that 98 per cent of CEOs are planning some form of transaction in the next 12 months, including 67 per cent who plan to pursue mergers and acquisitions, after 18 months of little M&A activity as investors and companies looked to more favourable conditions in 2025.

Nearly 70 per cent of bosses plan to pursue M&A in the next 12 months, up from 48 per cent in September, while 67 per cent agree there will be an uptick in megadeal –$US10bn ($16bn) or more – M&A activity as the market bounces back.

Mr Larocca said financially strong companies with access to capital were better positioned for acquisitions and growth strategies as inflation stabilised and expected rate cuts boosted acquirers’ confidence due to stable borrowing costs.

“We’ve also seen a focus on strategic partnerships and alliances, particularly in the AI and emerging tech space,” he said. “It is very clear that there is a significant intent to pursue transactions in the coming year.”

The 60 Australian CEOs surveyed came from consumer and health, financial services, energy, industrials, infrastructure and communications.

Half of all CEOs surveyed oversaw a company with revenue greater than $US5bn.

Originally published as Australian CEOs are confident and optimistic about the economy and Trump, an EY survey has found