Australia faces trade war risks from Trump's policies, warns treasurer

Australia will not be immune from repercussions of trade policies of US President-elect Donald Trump if they trigger a trade war, Treasurer Jim Chalmers will say in a speech on Monday. 

Trump campaigned on ambitious plans for across-the-board 10 per cent tariffs on imported goods and even higher levies on imports from China, Australia's biggest trade partner, and elsewhere. If enacted, they would push up consumer prices. 

"We should expect a small reduction in our output and additional price pressures, particularly in the short term," according to excerpts of Chalmers' speech at the Australian Institute of International Affairs seen by Reuters. 

 

"Specific features of our economy - like a flexible exchange rate and independent central bank, would help mitigate against some of this ... but we wouldn't be immune from escalating trade tensions that might ensue." 

Any impacts from a potential trade war and when will it begin to hit the global economy will be difficult to predict now, though Australia is confident to navigate any changes, Chalmers will say. 

"We are well placed and well prepared. Like any diligent country, Australia was ready for either outcome (of the US

election)," the treasurer will say. 

Last week, the Reserve Bank of Australia (RBA) Governor Michele Bullock told a parliamentary committee that it was hard to judge the inflation implications of the US election at this stage. 

Australia's centre-left Labour government is struggling with low voter approval ratings amid higher living costs and mortgage rates. Any further rise in inflation could impact the party's chances at the national election expected in May. 

A widely watched poll released on Monday showed the conservative Liberal-National coalition maintaining its lead of 51-49 on a two-party-preferred basis over Labour, while voters dissatisfied with Prime Minister Anthony Albanese's performance rose one point to 55 per cent.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)