Treasurer insists Australia is best-placed despite US tariff 'trepidation'
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The news: Treasurer Jim Chalmers accepts Australians will be looking at their stock portfolios with "trepidation" as Donald Trump's tariffs spark global turmoil, but he insists Australia is "placed and better prepared than our peers" to handle the fallout.
The numbers: New Treasury analysis indicates that the impact of US tariff policy changes on the Australian economy is a decline of 0.1% in real GDP and a 0.2 percentage point lift in inflation in 2025 compared to a situation without tariffs.
In the medium term, GDP is expected to be permanently lower, but the inflation lift is not expected to be maintained.
The indirect effects of tariffs on Chinese demand accounts for 80% of the GDP impact.
The Treasury modelling warns of a “greater-than-usual downside risk to the domestic and global outlook”. However, it notes the impact depends on how other countries respond and redirect trade to other markets, and how long the tariffs are in place for. But it does not factor in uncertainty, market volatility and any additional trade disruptions.
The context: Treasurer Jim Chalmers requested the new updated modelling from Treasury Secretary Steven Kennedy on Thursday following the US 'Liberation Day' tariffs announcement from the Trump administration. The modelling excludes services but includes a 34% retaliation tariff from China. It does not factor in non-tariff retaliations.
What they said: "I can assure people that in a world of volatility and uncertainty, Australia is better placed and better prepared than our peers. [But] everyone with a super fund, everyone with shares, I think probably every Australian, is seeing what's happening on global share markets and in our own sharemarket, with a degree of trepidation," Chalmers said on Monday.
The sources: Treasury modelling, Treasurer Jim Chalmers press conference
