Australia must choose between economic prosperity and subservience to the US trade and military agenda
Jan 22, 2025
Australian Government cabinet papers from 30 years ago show that Australian leaders suspected that the claims of weapons of mass destruction in Iraq were probably false. However, Australia committed troops because Australia wanted to ingratiate itself with the United States and was prepared to break international law to do so. This sets the standard for Australia’s willingness to co-operate with any Trump-led escalation of efforts to undermine China economy with tariffs and sanctions.
Thirty years of continued ingratiation leads to the belief that Australia is immune from the imposition of “America First” tariffs by a new Trump Government and that, in the broader context, this immunity will extend to the Australia China trade relationship.
Evidence for this belief also comes from Australia’s previous success in evading tariffs in the first Trump administration so the assumption is that the same escape is possible. It means Australia is able to adopt a beggar-thy-neighbour approach that ignores the damage done to others as long as Australia suffers no ill-effects.
This time around, President Trump, emboldened by second term success, wants to take back the Panama canal, buy Greenland, end the Ukraine and Israeli wars with a handshake and deport thousands who have made their homes in America. The idea that Australia’s history of compliance will protect it from direct US tariffs and sanctions impacts looks more tenuous with every new and outrageous statement of Trump’s policy intentions.
The Australian attitudes and the Trump administration’s approach to China impact on the Australia China relationship in two ways.
The first impact falls directly on the trade relationship. Sanctions make it more difficult for Australian companies to do business with China. We see this already with the Australian rare earths’ industry which was developed with Chinese investment and expertise. Australian companies with significant Chinese investment are locked out of US markets by sanctions meaning they are unable to sell their offtake to the US.
Sanctions distort investment and capital allocation. In Australia this delivers additional barriers to an investment environment that is already weighted against Chinese investment. Unfortunately it works against the normalisation of Australia-China trade relationships.
High tariffs distort the free flow of global trade by diverting sales to countries that do not have tariffs so their markets are ‘overwhelmed’ with products. Whilst this is good for consumers, it can have an adverse impact on local industries. This feeds further tariff barriers and it can also be manipulated by political forces to heighten racist reactions.
The second impact comes from the way the “America First” policy is not just about trade relationships. Integral to this policy is the idea of American exceptionalism expressed as a military and political hegemony. The United States sees itself as the leader of a world shaped in its own image. In this perspective, America always comes first and this flows through its military and defence policies, feeding and sustaining major country competition in the region.
Led by Defence Minister Marles, Australia has moved from co-operation with US defence forces to virtual integration with US defence forces and their command structure. Former Prime Minister Keating and Foreign Minister Carr, amongst other leaders, have decried this surrender of sovereignty with US bombers and troops stationed in Australia.
They believe the integration has become so pronounced that Australia has lost its sovereign ability to make decisions about military engagements in the region and that Australia has become a de-facto American garrison.
The commitment to the AUKUS program and its offensive submarine weaponry is further evidence of Australia’s willingness to assist with aggressive US policy.
A continuation or acceleration of an aggressive approach under Trump to affairs in the South China Sea or Taiwan will see increased pressure from elements of the Australian Government to endorse and follow this approach.
Trade and aggression are the two ends of the dilemma faced by Australia and which configure the Australia China relationship. Trumps “America First’ policy approach makes it much difficult to maintain the tenuous policy balance achieved by Australia in previous years.
China’s Global Develop Initiative and active participation in supporting regional forums offer the opportunity to Australia to extend co-operation and de-escalate major country competition.
Australia’s participation in APEC, RCEP, PIF, and as an ASEAN guest, provide the potential for Australia to regain a role as an independent mediator and facilitator. Australia likes to think that it already plays this role, but its subservience to the United States and its willingness to uncritically accept US agendas has diminished its role in these regional forums. Regaining that level of influence is difficult, but not impossible.
It is not too late for Australia to play a significant role in de-escalating major-country competition in the region. However, it will require a change in the way Australia approaches the Australia-US relationship because, under Trump, this will increase pressure on the Australia-China relationship.
Australia has to juggle its economic prosperity, which rests overwhelmingly on its trading relationship with China, with its increasing subservience to the US trade and military agenda, as illustrated by the outrageously expensive AUKUS submarine programme. The brash aggression of the Trump administration will test Australia’s resolve on both fronts to a greater extent than previous US administrations.
On balance, a 30 year history of ingratiation with US policy objectives, often in defiance of international law, suggests that Australia will find it more difficult to assist in de-escalating major country competition. It will take courage and goodwill for Australia to further Australia-China cooperation against escalated major-country competition in the era of “Trump 2.0”. China will need to continue with the heavy lifting of genuine co-operation, not just with Australia, but with the region.