Impact of Trump Presidency on Australian Manufacturing
Australian manufacturing is still reacting to Donald Trump’s victory in the US Presidential election as fears around the effect that economic protectionism may have on Australia’s export business with the United States. The first Trump presidency saw the imposition of tariffs on many imported goods and, as a knock-on effect, a trade war with China. For Aussies, that had the double effect of making it more expensive to do business in America while also impacting exports to China, which saw our nation caught in the middle. Industry Update spoke to Innes Willox, Chief Executive of the Australian Industry Group – and a former Australian Consul in Los Angeles – to learn what the manufacturing sector should expect from the next four years.
“He’s clearly now got a mandate to perform radical change within the United States, particularly around job creation and energy,” said Willox. “That has the capacity to be quite transformative, if not seismic – not just for the American economy, but the global economy. As Treasurer Jim Chalmers has said, steel fabrication Australia has got more at stake here than most. In fact, probably more than anybody else, given our economic and security relationship with the United States, but our very, very strong economic relationship with China as well. The first question is: what he will do with the Inflation Reduction Act? Will he wind it back, will he dismantle it or will he retain it? It is not clear exactly what he will do, but I think we can expect some action there towards winding at least parts of it back. How he does that we are just going to have to wait and see, but he has made it very clear that he wants to rebalance the future between renewable energy and new trends in oil and gas, which will have consequences for us here.”
The last Trump presidency saw Australia strike a delicate balance between China and America, and Willox suggested that the current Government would have to find that sweet spot again. “There was always the risk with the first Trump Administration that Australia is going to be collateral damage in the trade war between the US and China, given the fact that we are heavily reliant on both economies for our economic prosperity and our national security, particularly with the United States,” he said. “The worst-case scenario for Australia is that we will be forced to pick sides in that trade dispute. That would have enormously damaging consequences for Australia, even though we are increasingly self-reliant with the application of the Future Made in Australia Act. We have a very broad trading relationship with the United States, given that the Free Trade Agreement has been in place for 20 years, but we also have a deep and connected relationship with China both as a supplier and as a market for our goods.”
“It would be an impossible position for us to be forced to choose. We would have to completely recalibrate our economy, and that would be incredibly difficult. The first priority for the government has to be to make sure that we are exempted from tariffs that the Trump administration is going to impose. We have our free trade agreement to fall back on here, but during the last Administration, we came perilously close to having tariffs on our steel products imposed by Trump similar to earlier US steel tariffs based on carbon emissions. We really just avoided that by a whisker. It took a lot of work from a lot of people to get an exemption in place for our steel products. We should expect to go through that scenario again on various goods, where the economic relationship, entwined with the security relationship, will be tested. We have a lot of history, a lot of strong mutual ties and relationships to fall back on, and there is an understanding of the history of the relationship within Washington.”
