Imagine a world where might makes right, and the strongest countries dictate the rules. Sounds like a scene from a movie, but this is the reality we’re facing today.
The United States, under President Donald Trump, is rapidly changing the game, and Australia is caught in the crossfire.
The End of Free Trade Agreements
The World Trade Organisation (WTO) rules are being replaced by coercive bilateral contracts, where the US is using its economic power to bully other countries into signing trade deals that favor America.
Independent trade analyst Stephen Moran warns that these deals will not be free trade agreements, but rather a way for the US to exert its power over other nations.
The Limits of the Alliance
The US-Australia alliance is being tested like never before. Lowy Institute international security director Sam Roggeveen says that Trump’s behavior should make us rethink the limits of the alliance. “It’s a far shallower and more transactional thing than its Australian supporters like to believe,” he adds.
With China already upending the established rules-based order, the question is, what will happen if the US continues down this path?
Australia’s Experience with China
We’ve seen this before with China. In 2020, Beijing slapped punitive tariffs on Australian products, including barley, copper, and wine, after Canberra called for an investigation into the origins of the Covid-19 pandemic.
But Australia’s economy proved resilient, and the sanctions were eventually lifted. However, the question is, how will we cope with economic coercion from a “friendly” nation like the US?
Caught in the Crossfire
Australia and Canada are similar in many ways, but if the US can impose a 25% tariff on Canadian goods, what should Australia expect?
Professor Jenny Gordon warns that the US may demand concessions from Australia, and we need to consider what tariffs might be used as a coercive tool. With US big tech players having open access to the White House, will the Australian government allow social policy to be dictated by US business interests?
The Risks and Consequences
The greatest threat to Australia’s exports is the fallout from other global moves. Analysts warn that US trade deals with other countries could lead to discrimination against Australian exports.
The multiple justifications offered for the tariffs reveal their true nature as negotiating tactics rather than coherent policy solutions. The question is, will Australia be able to navigate these risks and find a way to establish credible, rules-based trade agreements?
A Lesson from China
Perhaps the best evidence of the failure of China’s sharp turn lies in its own course correction. Beijing’s national interests haven’t changed, but its diplomatic strategy has.
In recent years, China’s most vociferous diplomats have become more likely to voice support for the international system, free trade, and open markets. Will President Trump also be forced to learn this lesson, or will the US continue down a path of economic nationalism?
The Future of Global Trade
As the global economy grapples with this new reality, the key question becomes not whether nations will resist US pressure, but how they will reconstruct trading relationships in a world where economic nationalism has replaced multilateral cooperation as the driving force of international commerce.
One thing is certain – the world is changing, and Australia needs to be prepared to navigate these changes to protect its interests.