Too little thought has been given to the future of the Australian economy against the backdrop of a protectionist America.
Donald Trump’s grasp of history in Washington last week revealed a harsh truth for Australia.
Namely, that too little thought has been given to the nation’s economic future against the backdrop of a protectionist America.
Anthony Albanese phoned Keir Starmer first to discuss the US tariffs, when surely he should have contacted South-East Asian leaders.
As if to underline this vacuum in thought and preparation, Trade Minister Don Farrell declared on Friday that he was “not scared of Trump”. But it is too late for this kind of witless bravado.
It is not as if the warnings haven’t been sounded. They have been there since at least Trump’s first term and, really, from the disaster of Iraq and the 2008 global financial crisis. From the turn of the century, Australian political elites have watched six US presidential terms come and go, each in different ways diminishing American self-confidence, prestige and power.
At last week’s security conference in Canberra, organised by former prime minister Malcolm Turnbull, this columnist made the point that whatever the troubled future of AUKUS or the settling point for what percentage of GDP Australia spends on defence, the nation stands on the precipice of a fully-fledged trade war that would be disastrous for national prosperity.
Yet, the significance of those who have not only identified, but also have put forward genuine proposals as to how Australia might deal with this new environment now takes on a new urgency.
Dr Heather Smith, a former departmental secretary and now president of the Australian Institute of International Affairs, told the conference that the “intergenerational consequences for our security, prosperity and social cohesion are profound. But our political and some of our bureaucratic class are largely admiring the problem”.
Last week in Canberra, Smith lamented that “as we head to an election, there is no national consensus or bipartisan approach on how to manage these tectonic shifts nor a public understanding of the trade-offs ahead to build resilience at home and embark on a sustained focus on deterrence as we inevitably ratchet up defence spending”.
But it would be difficult to point to any speech by Prime Minister Anthony Albanese that attempts to deal with the scale of this challenge, beyond stasis in stabilising relations with China and embracing AUKUS. Looking back over Albanese’s term in office, one finds only a rhetorical wasteland, strewn with the debris of half-chewed talking points.
Smith’s warnings were complemented by Professor Shiro Armstrong, director of the East Asian Bureau of Economic Research at the ANU.
Armstrong is the 21st-century champion of the John Crawford tradition in Australian economic diplomacy. Crawford was the father of Australia’s post-war trading relationship with the region, especially Japan. For him, trade was the path to effective peace in Asia. Armstrong and his colleague Peter Drysdale have refitted this case for the new circumstances – a case that resonates regionally.
Armstrong told the Turnbull conference that “defending the multilateral trading system from the pressure that Washington has now put on it is top priority for Australia”.
He warned that “South-East Asia has the most to lose – and this is where Australia has influence and agency”. The relationship building in the region, on which ANU and the government have been engaged, will provide a solid foundation here. But Albanese phoned his Labour soulmate in Britain, Keir Starmer, to discuss the Trump tariffs, when surely he should have first called counterparts in Jakarta, Manila, Kuala Lumpur, Tokyo, Seoul, Singapore and even Beijing.
Come a second term, Albanese will also need a new trade minister who has some grasp of the issues, doesn’t feel the need to grandstand and can develop a department that can advise in less than three days on the reality of Australia’s trade with the US when Washington bureaucrats make unfounded claims against us. It wouldn’t hurt either if defence had a similarly informed minister with real intellectual calibre.
So appeals to “grit the teeth” and hope for better things in four years won’t cut it. That might be a useful public strategy while policymakers work out what to do.
The problem is that normally governments try to fit new events such as the Trump shocks within their received general assumptions about the international system. This time, such a patchwork job won’t work. This is an event that compels a rethink of the perils and opportunities of the new world trade picture.
It is too soon to judge whether Trump’s trashing of the international order ranks with world-shaking events in the 20th century such as World War I, the Bolshevik revolution, the rise of fascism, the post-World War II Soviet-American confrontation, the Asian and African rebellion against Western imperialism, and the implosion of the Soviet Empire. But the portents so far are not good.
Australia, though, has never really had to confront squarely the consequences of the shocks to American belief and purpose in recent years. It did not feel directly the strategic failure in Vietnam or, in this century, in Iraq and Afghanistan. It did not see fit to undertake a fundamental rethink of the assumptions that guide its strategic policy after those engagements.
What Australia does do well is to imagine the old trauma of national survival reproducing itself endlessly. So the leaders of the major parties now squabble over the fate of Darwin Port, and this after two reviews — one by each leader — found the risks could be comfortably managed.
But as they do so, the country drifts further away from the moorings of a substantive policy response to the new world into which Trump is taking us.
Republished from AFR, 6 April 2025
James Curran is Professor of Modern History and senior fellow at Sydney University’s US Studies Centre. He is writing a book on Australia’s China debate for New South Press.
James Curran is the AFR’s International Editor and Professor of Modern History at the Sydney University.