Chalmers flags Trump trade blow, price hikes and growth hit
Make us a preferred source
Make us a preferred source on Google
The news: Treasurer Jim Chalmers has sounded the alarm over the potential economic fallout for Australia from US president-elect Donald Trump’s trade policies, with forecasts of slower growth and rising prices.
In prepared remarks for the Australian Institute for International Affairs gala dinner on Monday, Chalmers said Treasury modelling anticipates a “small reduction in our output and additional price pressures, particularly in the short term.”
Chalmers' comments come as Labor readies for its re-election bid next year, with cost-of-living concerns expected to be a major issue, like in the US election.
The context: Donald Trump reclaimed the US presidency in last week’s election in an historic comeback. His aggressive America-first campaign included plans to impose hefty tariffs on foreign goods, including taxes of up to 60% on Chinese imports and a blanket 10% levy on goods from other countries.
Australia, with strong trade links to China and critical economic ties to the US, faces potential fallout from a renewed US-China or potentially wider global trade war.
Chalmers said Australia's floating exchange rate and independent central bank would offer some resilience, adding the nation was “well placed and well prepared,” for Trump’s “different suite of policies.”
But he also cautioned that if Trump’s tariff plans were to trigger a global trade war, Australia “wouldn’t be immune.”
In his speech, he praises Australia’s ambassador to the US and former Prime Minister, Kevin Rudd, about whom Trump has made negative offhand comments.
He said Rudd helped arrange key meetings for Chalmers with both Republicans and Democrats ahead of the election, including a meeting with billionaire hedge fund manager Scott Bessent, one of the frontrunners to serve as Treasury secretary in Trump’s administration.
Rudd had previously made critical comments about Trump, including on social media. The comments have now been deleted, as they did not reflect government views, according to a statement on his personal website.
What they said: “Treasury’s analysis demonstrated that we should expect a small reduction in our output and additional price pressures, particularly in the short term,” Chalmers said. “But specific features of our economy – like a flexible exchange rate and independent central bank, would help mitigate against some of this.”
“Globally – the impact was much more substantial. The timing of this, and the responses and ramifications that might follow – what economists call second-round effects – are difficult to predict. But we wouldn’t be immune from escalating trade tensions that might ensue,” he added.
“We expect the incoming US administration to bring a different suite of policies… We are confident in our ability to navigate that change, as partners. Nobody should underestimate our ability to make it work. We are well placed and well prepared. Like any diligent country, Australia was ready for either outcome.”
Of Rudd, Chalmers said: “I pay tribute to Kevin Rudd. Kevin is doing an excellent job as Australia’s Ambassador to the United States. Helping to strengthen the alliance. Finding new areas for us to deepen economic cooperation. And building good relationships with Republicans and Democrats alike. I’ve seen this for myself.”
The source: Chalmers speech
