Former US President Donald Trump’s return to the global stage has sent shockwaves across allied nations, with Australia now facing the consequences of his hardline economic and foreign policies. Following his confrontational stance toward Canada, Mexico, and Europe, Trump’s aggressive trade policies and isolationist rhetoric have placed Australia in a precarious position. His threats to impose a 25% tariff on steel, aluminum and other imported goods, withdraw US aid from allied nations, and pressure NATO to handle Russia independently have upended international relations.
Trump’s Aggressive Trade Policy and Australia’s Economic Concerns
Speaking to ABC News recently, former Australian Prime Minister Malcolm Turnbull expressed deep concern over Trump’s economic nationalism, particularly its implications for Australia’s trade interests. Turnbull criticised Trump’s trade stance as "economic nonsense," warning that Australia may face greater difficulties negotiating exemptions from tariffs under a second Trump administration.
In 2018, Turnbull successfully secured exemptions from Trump’s steel and aluminum tariffs, but this time, he fears Australia may not be as fortunate. According to Trading Economics, Australia's steel and iron exports to the US were valued at approximately USD 237 million (AUD 377 million) in 2023. BlueScope, Australia’s largest steel manufacturer, operates extensively in the US, making any increased tariffs a direct threat to Australian industry and economic stability.
Current Australian Prime Minister Anthony Albanese now faces a critical test of leadership: Can he effectively negotiate with Trump and shield Australia’s economy from punitive tariffs? Whether through diplomatic discussions, a direct visit to Washington, or strategic trade alliances, Albanese must prove his ability to safeguard Australia’s national interests.
The Erosion of Traditional U.S.-Australia Relations
Historically, Australia has benefited from strong diplomatic, economic, and military ties with the United States. However, Trump’s transactional approach to international relations threatens to redefine this partnership. His business-first strategy prioritises economic gains over historical alliances, making it clear that allies must now offer tangible benefits to secure favourable treatment from Washington.
As Trump’s US prioritises economic advantage over historical alliances, Australia must decide whether to continue as a loyal partner or evolve into a more independent geopolitical force
Australia, once considered a steadfast US ally, may no longer receive automatic exemptions or preferential treatment in trade agreements. The long-standing Australia-United States Free Trade Agreement (AUSFTA), signed in 2005, facilitated smoother trade flows and economic integration. However, Trump's tariff impositions raise concerns that even structured agreements may be disregarded if they do not align with his economic agenda.
Moreover, Australia has consistently provided military and strategic support to the US in conflicts such as Ukraine-Russia war and in the past wars in Iraq and Afghanistan. Yet, Trump's retreat from multilateral commitments and his preference for economic leverage over traditional alliances signal a shift in Washington’s expectations. If US aid and security guarantees are tied to financial interests rather than shared democratic values, Australia must reconsider the foundation of its alliance with America.
Australia’s Strategic Dilemma: Navigating the U.S.-China Power Struggle
Australia has long maintained a close alliance with the US, particularly in defence and intelligence sharing. The country plays a crucial role in the Quadrilateral Security Dialogue (QUAD), a strategic coalition with the US, Japan, and India aimed at counterbalancing China’s influence in the Indo-Pacific. However, as Trump pivots toward a more transactional foreign policy under his “America First” doctrine, Australia must reassess its approach to regional diplomacy.
Despite its security commitments with the US, Australia’s economic dependence on China remains significant. China is Australia’s largest trading partner, and deteriorating Sino-Australian relations in recent years have already impacted key industries, including coal, wine, and barley exports. Trump’s adversarial stance on China and potential demands for Australia to distance itself further from Beijing could put Canberra in an untenable position—choosing between economic pragmatism and alliance loyalty.
Shifting US Defence Commitments: A Cause for Alarm?
Trump’s foreign policy shift extends beyond trade. His insistence that NATO countries take sole responsibility for confronting Russia over Ukraine signals a broader retreat from traditional US security commitments. If Trump continues to withdraw support for global security alliances, Australia may find itself forced to rethink its defence posture.
While the U.S. does not provide direct development assistance to Australia, it plays a significant role in defence collaboration, intelligence sharing, and military research. U.S. military bases on Australian soil, joint naval operations, and AUKUS (Australia-UK-US security pact) reinforce the alliance. However, Trump's prioritisation of economic gains over strategic alliances raises questions about whether Washington’s commitment to Australian security will remain steadfast.
If Trump reduces the US role in regional security, Australia may need to increase its defence spending significantly to compensate. This would not only strain the national budget but also force a reassessment of military dependencies. Should Australia pivot toward a more self-sufficient defence policy, seeking greater partnerships with regional players like India, Japan, and South Korea? Or should it continue to rely on Washington, even if Trump’s leadership signals less predictability?
Can Albanese Chart an Independent Path for Australia?
Australia must now define a path that ensures economic security while maintaining its strategic alliances. If Trump’s tariff policies come into effect, the Albanese government could explore alternative trade agreements, strengthen ties with regional partners like Japan, South Korea, and Southeast Asia, and pursue greater economic diversification.
A key question looms: Will Australia continue to act as a subordinate ally, accepting US dictates, or will it assert an independent foreign policy that balances economic pragmatism with strategic security?
Given the unpredictability of Trump's presidency, Canberra must prepare for a more self-reliant future. Relying solely on Washington’s goodwill may no longer be a viable strategy. Instead, a diplomatic recalibration—one that embraces multilateralism, engages China without compromising security, and strengthens regional partnerships—could be Australia’s best course of action in a shifting global landscape.
As Trump’s US prioritises economic advantage over historical alliances, Australia must decide whether to continue as a loyal partner or evolve into a more independent geopolitical force. Albanese's ability to navigate these challenges will determine whether Australia remains a US ally under increasingly rigid terms or forges a more autonomous path in global politics.