Australia’s best hope: wait for Americans to turn on Trump

Nobody needed a ceremony in a rose garden to know that Donald Trump wanted a divorce from the global economic system that has delivered wealth and security to America for at least seven decades. The signs were all there before the reality-TV theatrics at the White House. Now the objective is clear.

The tariffs imposed on Australia are based on a fraud. Wielding a prop for his stage show, the United States president claimed Australia imposed 10 per cent tariffs on American exports. It does not. Yes, it has biosecurity controls on beef, pork and food imports. It does not apply tariffs. This has no bearing on the outcome, however, because Trump is intent on imposing tariffs.

US President Donald Trump tosses a “Make America Great Again” hat during his tariff announcement in the Rose Garden of the White House on Wednesday.Credit: Bloomberg

The reasoning behind the 10 per cent tariff on Australia is nakedly political and at odds with rational economic thinking – and it makes a mockery of anyone who suggests the outcome would have been any different if Anthony Albanese had held another phone call with Trump.

The blame for the tariffs does not lie with Australia – not with the prime minister, not with ambassador Kevin Rudd for calling Trump a “village idiot” a few years ago, not with former prime minister Malcolm Turnbull for angering Trump by criticising him a few weeks ago.

The blame lies with Trump, who is the very definition of the emperor with no clothes. And it lies with the blind acolytes around him.

The Australian response is cool – as it should be. Opposition Leader Peter Dutton has the same approach as Albanese: there will not be retaliatory tariffs by Australia against America. This is vastly different from the European Union and Canada, for good reason. Revenge might feel good, but it would rebound on Australia as an economy built on trade. And the retaliatory tariffs would only push up prices for Australian households.

This means the immediate response can look too timid. The government will put $5 million more into the agency that shields industry from imports that are dumped below cost on the Australian market. This is a tiny step when we could see a wave of products redirected from the US. A bigger move will be to use the $15 billion National Reconstruction Fund to help companies hurt by Trump. The problem is that Australia cannot subsidise its way out of the new protectionism. Other countries have tried to do so; it does not work.

Albanese and Dutton both want to look strong against Trump, but the campaign arguments are superficial and formulaic. Dutton blames Albanese and Rudd – surprise – but does not set out any substantial difference in approach. He targets Albanese for being praised in the China Daily and claims to be tough on Beijing. (So tough that he will exploit Chinese propaganda in an election campaign.) He does not set out any significant idea to stop Chinese ships circumnavigating Australia.

A deeper debate would consider how Australia might change direction in a world changed by Trump. But Albanese and Dutton do not want this debate. Both insist the alliance with the US is robust when Australians can see it is not. Both insist the AUKUS alliance on nuclear-powered submarines will deliver the defence Australia needs when, in truth, the project is bedevilled by doubt. An honest election campaign would confront the need for a national insurance policy against an unreliable ally.

Others say what Albanese and Dutton prefer not to acknowledge. That was clear this week when Australian experts on security and defence broadly agreed on a shift towards Australian self-reliance. Heather Smith, a former department secretary with decades in diplomacy, set this out most starkly at a forum in Canberra on Monday convened by Turnbull.

“The US believes that it has been systematically exploited by the global system it created, ignoring the benefits it has accrued over decades,” Smith said. “I think perhaps more ominous for Australia is Trump’s view that the US economy needs a fundamental and, if necessary, painful transformation. I think that Trump is prepared to risk a US recession and financial instability and ongoing volatility to achieve this, with all the attended fallout this brings to the global economy.”

Smith had a reality check for those who worry that the rules-based order is collapsing. It had already collapsed, she said, and was unlikely to be rebuilt with a change of president.

“It raises the possibility that the 2020s could be a lost global decade – both lost opportunity, lost growth in living standards, a further erosion of social cohesion, and all creating that very fertile territory for even more assault on what remains of the liberal democratic order,” she said. “And I think we all know that the parallels to the 1930s are obvious in that context.”

In an audience of 100 or more at the National Press Club, nobody countered with a Panglossian view of a brighter decade. The consensus was that Australia must prepare for a world nobody should want. Former defence secretary and ASIO chief Dennis Richardson admitted the contradictions at play: America was less reliable, he said, but Australia needed AUKUS to work. Rachel Noble, the former director-general of the Australian Signals Directorate, made a key contribution about the need to share intelligence with the US under the Five Eyes agreement – something we should not want to give up.

Hugh White, professor emeritus at the Australian National University, made the essential point that the ANZUS alliance had to help Australia defend itself independently, rather than aiding America in maintaining its primacy. This primacy, he said, was gone. Several speakers disagreed on whether AUKUS was the answer. There was no convincing insurance policy if AUKUS failed other than to rely on more bombers and missiles (and perhaps uncrewed submarines) to deter Chinese ships.

What stood out was the sense of American decline under Trump and the presidents who come after him. For the moment, at least, the anxiety about America eclipses the fear of China.

(To Turnbull’s credit, he assembled a forum that included speakers who disagreed with him on AUKUS, in an engaging discussion of high calibre. It is in podcast form here.)

The response from Albanese and Dutton should be seen in this wider context. Tough rhetoric will not change anything. Appeasing Trump may not help, either. Albanese has hinted at a decision on the Port of Darwin to remove Chinese ownership and satisfy US security concerns. Meanwhile, Dutton wants to spend $3.5 billion on more F-35 jet fighters from the US – the very opposite of a decision by Canadian Prime Minister Mark Carney to reconsider buying the same aircraft.

Albanese is not planning a drastic policy response while the government is in caretaker mode during the election campaign. There is time to consider a measured reaction. Labor calculates that voters regard Dutton as the Australian leader who is most like Trump – and that this hurts him.

The Australian interest now lies in waiting for Trump to damage America as much as possible, as quickly as possible. Only this will force a reckoning for US households in time for the midterm Congressional elections in November 2026. Trump will not listen to world leaders, but he may heed a message from American voters.

David Crowe is chief political correspondent.

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