Australia is well placed to weather a trade war triggered by the protectionist policies of US President Donald Trump, according to a UNSW academic.
University of New South Wales business school J.W Nevile fellow Tim Harcourt said President Trump’s election pledge to “hit imports” from China and Mexico with tariffs could trigger a trade war, but added that Australia will not be as negatively affected as many other countries.
“Australia is the best placed of any Western nation in the world to withstand a Trump-started trade war,” he said.
“We are now staring down the barrels of a global battle for free trade, thanks to Trump's protectionist trade policies. This would have potentially serious implications for trade-focused economies such as Australia. However the ‘Aussie battler’ could come out better off.”
Mr Trump has already made moves to remove the US from several free trade agreements, including the Trans-Pacific Partnership with Australia, New Zealand and nine other Pacific nations, Mr Harcourt said, but added this could give a “massive boost” to Australia-China trade.
“It comes just as Australia needs it, and everyone from miners in the outback to farmers in the bush and service exporters, like architects who are building in the second and third tier cities, are now eyeing up the possibilities of much more trade with China.
“The US could have had a slice, but instead it looks like China will be the economic winner - exactly the opposite of what Trump wanted,” he said.
State Street Global Advisors recently stated that China was the most likely nation to retaliate against US protectionism, saying the country had "little to lose and much to gain" from responding to the proposed tariffs.