Trump, Trade and Australia: Republican candidate continues hard line on trade - NAB

Tom Taylor, Head of Economics at NAB, suggests that Mr Trump’s economic platform is radical in many respects, calling for big tax cuts, alongside continued support for health and welfare spending.

Key Quotes

“His trade policy has the most direct implications for Australia as he proposes a more assertive unilateral approach that could trigger global trade tensions, especially with China (Australia’s biggest export market), runs against the rules-based multilateral trading system that Australia and NZ have always supported and could result in the WTO being dragged into very difficult US-Chinese trade disputes.

What does it mean for Australia?

Australian and New Zealand leaders must be viewing Mr Trump’s trade policy announcements with a degree of concern.

Both Australia and New Zealand have always been strong supporters of the rules based framework for international trade, a system based on law and negotiation rather than the flexing of unilateral power by the big trading nations. Anything that weakens the role of the multilateral trading system and the WTO – which already has enough to worry about, given the non-completion of the Doha Round of trade liberalisation negotiations – should raise concern here.

Mr Trump’s agenda, with its focus on the use of unilateral US trade measures like Section 301 cases and simply labelling China to be a currency manipulator could land the WTO right in the middle of a series of US-China trade disputes in which the former ends up on the losing side. His agenda would also mean the end of the TPP, an initiative welcomed by the Australian Government.

Australia would face an unenviable position in any heightening of US-China trade tensions as it has such close ties to both countries. China is easily our biggest export market, buying around 30% of all exports, well above the US’s 7% share. Australia has also signed free trade agreements with China as well as the US and both are major investors here. While Mr Trump has said he will replace “bad” free trade deals with “great” ones, the big trade surplus the US runs with Australia should keep it off the White House radar. We remain vulnerable to any increased US reliance on safeguard tariffs as our bilateral free trade agreement left each side able to apply them but Australian industries have not been targets of particular attention for US safeguard tariffs in recent years."