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Financial markets are tanking as Trump tariffs hit home

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Financial markets are tanking. Here’s why it’s best not to panic

Luke Hartigan, University of Sydney

Financial markets around the world have been slammed by the Trump adminstration’s sweeping tariffs on its trading partners, and China’s swift retaliation.

Share markets have posted their biggest declines since the COVID pandemic hit in 2020, as fears of US recession surged. Iron ore, copper, oil, gold and the Australian dollar have all tumbled.

On Wall Street, leading indices have fallen around 10% since the tariffs were announced, while the tech-heavy Nasdaq is down 20% from its recent peak. European and Asian markets have also slumped.

In Australia, the key S&P/ASX 200 slid another 4.2% on Monday to levels last seen in December 2023, taking its three-day losses since the announcement to more than 7%.



Why are markets reacting so badly?

Financial markets reacted so negatively because the tariffs were much larger than expected. They represent the biggest upheaval in global trade in 80 years.

Many traders were hoping the tariffs would be used mainly as a bargaining tool. But comments by US President Donald Trump that markets may need to “take medicine” seem to suggest otherwise.

The tariffs are expected to weaken economic growth in the US as consumers pare back spending on more expensive imports, while businesses shelve investment plans. Leading US bank JP Morgan has put the chance of a US recession as high as 60%.

This comes at a time when the US economy was already looking fragile. The highly regarded GDPNow model developed by the Atlanta Federal Reserve Bank indicates US March quarter GDP will fall 2.8%, and that was before the tariff announcement.

Worries about global growth

Fears of a recession in the United States and the potential for a global downturn has led to a broad sell-off in commodity prices, including iron ore, copper and oil. Further, the Australian dollar, which is seen as a barometer for risk, has fallen below 60 US cents in local trading – its lowest level since 2009.

While the direct impact of tariffs on Australia is expected to be modest (with around 6% of our exports going to US), the indirect impact could be substantial. China, Japan and South Korea together take more than 50% of Australia’s exports, and all have been hit with significantly higher tariffs.

Treasurer Jim Chalmers said on Monday that the direct impact on the Australian economy would be “manageable”.

The full effect on Australia will depend on how other countries respond, and whether we can redirect trade to other markets.

The rapid decline in the Australian dollar will help offset some of the negative effects associated with a global downturn and the fall in commodity prices.

We can also expect some interest-rate relief. Economists are now predicting three further interest rate cuts by the Reserve Bank, starting in May. This brings economists into line with financial market forecasts.

Hang in there, markets will recover

Watching equity markets tumble so dramatically can be unsettling for any investor. However, it is important to note that equity markets have experienced many downturns over the past 125 years due to wars, pandemics, financial crises and recessions. But these market impacts have generally been temporary.



History suggests that over the long term, equity prices continue to rise, supported by growing economies and rising incomes.

The key thing for investors to remember is to not panic. Now is not the time to decide to switch your superannuation or other investments to cash. This risks missing the next upswing while also crystallising any current losses.

For example, despite the steep market sell-off in March 2020 as the first COVID lockdowns came into effect, the Australian share market had completely recovered those losses by June 2021.

It is good practice for investors to regularly reassess their risk profile to make sure it is right for their current stage of life. This means reducing the allocation to riskier assets as investors get closer to retirement age, while also maintaining a cash buffer to avoid having to sell assets during more turbulent periods such as now.

Super funds are exposed to global risks

The current sell-off has highlighted a potential issue facing the superannuation industry.

So much of our superannuation is now invested in global equity markets, mostly in the US, because Australia’s superannuation savings pool – at more than A$4 trillion – has outgrown the investment opportunities available in Australia.

Another issue facing the superannuation industry is the growth of cyber attacks, with several funds targeted in a recent attack. Given the massive size of the assets held by some funds, it would seem they need to improve their security to be on par with that of the banking system.

Luke Hartigan, Lecturer in Economics, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Antisemitism debate a political minefield for royal commission

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The antisemitism debate is already a political minefield. The royal commission must rise above it

Matteo Vergani, Deakin University

What we currently know about antisemitism in Australia is pieced together from a fragmented body of information produced by community organisations, researchers and law enforcement. And it is largely interpreted and translated to the public through news reporting.

Through this reporting, Australians have learned that organised criminal groups were involved in targeting Jewish communities and foreign actors also played a role.

At the same time, some data on antisemitic incidents released by security agencies has been incorrect. Other statistics produced by community organisations has been publicly challenged.

Researchers like myself have also produced data on antisemitic incidents, but this is limited in many ways.

In a nutshell, the picture of what constitutes antisemitism and how and why it has spiked in recent years is far from being clear.

This lack of clarity matters. Without a reliable understanding of what happened in the lead-up to the Bondi terror attack, which data can be trusted, and how different forms of antisemitism intersect, Australia cannot fully grasp how it reached a point where Jewish Australians were murdered at a public religious gathering.

Shedding light on this problem will be difficult, but it is essential to understand both the scale of the problem and how to respond.

Potential for more divisiveness

The royal commission established by Prime Minister Anthony Albanese is designed to address many of these unresolved issues.

As set out in its terms of reference, it will examine the nature and prevalence of antisemitism in Australia and assess how it can be more effectively addressed. It will also:

  • Review the responses of security and law enforcement agencies
  • Investigate what happened before, during, and after the Bondi attack
  • develop recommendations aimed at strengthening social cohesion.

Social cohesion and national consensus are the stated end goals of the entire exercise. Yet, the context in which the commission is operating is highly volatile. There is a real risk that rather than repairing social cohesion, the process itself could damage it.

This risk comes from the heavy political pressure now attached to the royal commission and from the way some political actors are using it as a weapon in broader political battles, including attacks on the government.

The antisemitism debate is already a political minefield. And the commission has entered that terrain from its first day.

The decision to acknowledge the International Holocaust Remembrance Alliance’s definition of antisemitism in the terms of reference is likely to be used by some to delegitimise the commission altogether. Critics argue the definition can be used to silence legitimate criticism of Israel, while supporters say it draws a necessary line between political critique and antisemitic tropes.

At the same time, some politicians have questioned the appointment of Former High Court justice Virginia Bell to head the commission, which could also undermine the credibility of the inquiry.

As a result, the commission is already inflaming existing political tensions. This is deeply unfortunate because it makes the task harder for those who are genuinely focused on understanding antisemitism, responding to it effectively, and improving the safety and well-being of Jewish Australians.

Why the Christchurch royal commission was successful

Royal commissions carry strong symbolic weight. They are often implemented when something has gone badly wrong, and the social fabric feels strained. The aim is to restore trust and provide a clear public account of what happened and why.

A useful point of comparison is the royal commission that followed the Christchurch terrorist attack in New Zealand. The inquiry led to wide-ranging reforms, including changes to firearms laws, counter-terrorism frameworks, approaches to social cohesion and inclusion, hate crime and hate speech legislation, and improved support for victims and witnesses.

It also contributed to the creation of the Christchurch Call to eliminate terrorist and violent extremist content online. This global initiative involving governments and technology companies has been successful in limiting the spread of terrorist and violent extremist material.

However, the political and social climate in New Zealand at the time was very different. There was a stronger sense of national unity and far less public contestation about what constituted hate. The attack was also not entangled with an ongoing and deeply polarising international conflict.

In Australia, the context is far more charged. The war in Gaza continues to divide public debate, regularly spilling into domestic politics.

It’s worth noting that antisemitic attacks have not stopped after Bondi. There was a firebombing less than two weeks later. This makes the task of using a royal commission to calm tensions and rebuild trust significantly harder.

Many pieces to the puzzle

Despite these difficulties, the commission matters now more than ever. Jewish Australians need answers, and the broader public deserves to understand what actually happened.

At present, the picture of what has caused rising antisemitism and the Bondi attack is confused. Public sentiment on the war, organised crime, foreign actors and terrorist ideology all appear to intersect, but how they connect remains unclear.

Different security agencies, researchers, and community organisations hold different pieces of evidence. Without bringing these strands together, Australians cannot fully understand the problem, let alone work out how to prevent it from happening again.

The path ahead will be difficult and exposed to disruption. One obvious challenge is the risk of further attacks while the inquiry is underway. Any new incident would complicate the process.

If, for example, an attack occurred that was shown to involve formal training or links to a terrorist organisation, serious questions would arise about whether the commission’s terms of reference remain adequate, or whether additional investigative processes would be required.

The most important test will come at the end. The commission’s recommendations must be acted on, regardless of which party is in government. That follow-through is what determines whether a royal commission produces real change or becomes just a symbolic exercise.

Meeting this test will require political restraint and maturity. It will mean resisting the temptation to turn the commission into a tool for partisan conflict and instead treating it as a shared national effort to protect communities and restore trust.The Conversation

Matteo Vergani, Associate Professor and Director of the Tackling Hate Lab, Deakin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Viruses experts are watching in 2026

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Viral outbreaks are always on the horizon – here are the viruses an infectious disease expert is watching in 2026

Viruses know no borders.
mammuth/iStock via Getty Images Plus

Patrick Jackson, University of Virginia

A new year might mean new viral threats.

Old viruses are constantly evolving. A warming and increasingly populated planet puts humans in contact with more and different viruses. And increased mobility means that viruses can rapidly travel across the globe along with their human hosts.

As an infectious diseases physician and researcher, I’ll be keeping an eye on a few viruses in 2026 that could be poised to cause infections in unexpected places or in unexpected numbers.

Influenza A – on the cusp of a pandemic

Influenza A is a perennial threat. The virus infects a wide range of animals and has the ability to mutate rapidly. The most recent influenza pandemic – caused by the H1N1 subtype of influenza in 2009 – killed over 280,000 people worldwide in its first year, and the virus continues to circulate today. This virus was often called swine flu because it originated in pigs in Mexico before circulating around the world.

Most recently, scientists have been monitoring the highly-pathogenic avian influenza H5N1 subtype, or bird flu. This virus was first found in humans in southern China in 1997; wild birds helped spread the virus around the world. In 2024, the virus was found for the first time in dairy cattle in the U.S. and subsequently became established in herds in several states.

Cow standing in a pen, looking into camera
Avian flu has spread across dairy herds in the U.S.
USDA Agricultural Research Service via AP

The crossover of the virus from birds to mammals created major concern that it could become adapted to humans. Studies suggest there have already been many cow-to-human transmissions.

In 2026, scientists will continue to look for any evidence that H5N1 has changed enough to be transmitted from human to human – a necessary step for the start of a new influenza pandemic. The influenza vaccines currently on the market probably don’t offer protection from H5N1, but scientists are working to create vaccines that would be effective against the virus.

Mpox – worldwide and liable to worsen

Mpox virus, formerly called monkeypox virus, was first discovered in the 1950s. For many decades, it was seen rarely, primarily in sub-Saharan Africa. Contrary to its original name, the virus mostly infects rodents and occasionally crossed over into humans.

Mpox is closely related to smallpox, and infection results in a fever and painful rash that can last for weeks. There are several varieties of mpox, including a generally more severe clade I and a milder clade II. A vaccine for mpox is available, but there are no effective treatments.

Microscopy image of clusters of teal circles
Mpox has spread around the world.
NIAID/Wikimedia Commons, CC BY-SA

In 2022, a global outbreak of clade II mpox spread to more than 100 countries that had never seen the virus before. This outbreak was driven by human-to-human transmission of the virus through close contact, often via sex.

While the number of mpox cases has significantly declined since the 2022 outbreak, clade II mpox has become established around the world. Several countries in central Africa have also reported an increase in clade I mpox cases since 2024. Since August 2025, four clade I mpox cases have occurred in the U.S., including in people who did not travel to Africa.

It is unclear how mpox outbreaks in the U.S. and abroad will continue to evolve in 2026.

Oropouche virus – insect-borne and poised to spread

Oropouche virus was first identified in the 1950s on the island of Trinidad off the coast of South America. The virus is carried by mosquitoes and small biting midges, also known as no-see-ums.

Most people with the virus experience fever, headache and muscle aches. The illness usually lasts just a few days, but some patients have weakness that can persist for weeks. The illness can also recur after someone has initially recovered.

Close-up of small winged bug on human skin
Biting midges – which carry Oropouche virus – are hard to see, as their alias ‘no-seem-ums’ implies.
CSIRO via Wikimedia Commons, CC BY-SA

There are many unanswered questions about the Oropouche virus and the disease it causes, and there are no specific treatments or vaccines. For decades, infections in people were thought to occur only in the Amazon region. However, beginning in the early 2000s, cases began to show up in a larger area of South America, Central America and the Caribbean. Cases in the United States are usually among travelers returning from abroad.

In 2026, Oropouche outbreaks will likely continue to affect travelers in the Americas. The biting midge that carries Oropouche virus is found throughout North and South America, including the southeastern United States. The range of the virus could continue to expand.

Even more viral threats

A number of other viruses pose a risk in 2026.

Continuing global outbreaks of chikungunya virus may affect travelers, some of whom may want to consider getting vaccinated for this disease.

Measles cases continue to rise in the U.S. and globally against the backdrop of decreasing vaccination rates.

HIV is poised for a resurgence, despite the availability of effective treatments, due to disruptions in international aid.

Person standing in room, holding pills in hand
Despite the availability of effective treatments, diseases like HIV and measles are seeing resurgences.
Brian Inganga/AP Photo

And as-yet-undiscovered viruses can always emerge in the future as humans disrupt ecosystems and travel around the world.

Around the world, people, animals and the wider environment are dependent on each other. Vigilance for known and emerging viral threats and the development of new vaccines and treatments can help keep everyone safe.The Conversation

Patrick Jackson, Assistant Professor of Infectious Diseases, University of Virginia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Iran’s leaders should take Trump’s warnings seriously. They have few options left

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Today Venezuela, tomorrow Iran: can the Islamic Republic survive a second Trump presidency?

Better days: Venezuelan President Nicolas Maduro, left, met the supreme leader of Iran, Ali Khamenei, in Tehran on Oct. 22, 2016.
Pool/Supreme Leader Press Office/Anadolu Agency/Getty Images

Aaron Pilkington, University of Denver

Perhaps no one outside of Venezuela or Cuba should care more about the U.S. capture of nominal President Nicolás Maduro than the Islamic Republic of Iran’s supreme leader, Ali Khamenei.

Khamenei and his regime are in trouble, and it’s not clear how they would survive should the Trump administration decide to support the millions who want a new government system without Khamenei and his ilk.

Iran has no state allies that would be willing to intervene militarily on its behalf. Further, its once-powerful network of partner and proxy militias – Lebanese Hezbollah, the Houthi rebels in Yemen, and other members of the Axis of Resistance – has been rendered incapable or reluctant to get involved. And Iran’s economy is in shambles in the midst of an ongoing water crisis with no relief in sight.

Further, the Iranian people have again taken to the streets to air their grievances against harsh economic conditions as well as government corruption, mismanagement and hypocrisy, echoing similar conditions to Venezuela in recent years.

Lastly, President Donald Trump has returned his attention to Iran. On Jan. 2, Trump warned Khamenei that if his forces violently suppress protesters, Iran would be “hit very hard” by the U.S.

Trump’s warning and show of solidarity will likely embolden protesters, which will almost certainly cause Iran’s internal security to crack down harder, as has happened in the past. Such U.S. intervention could lead to the overthrowing of the ayatollah, intended or not. Furthermore, Maduro’s fate demonstrates that the Trump administration is willing to use military force for that purpose if deemed necessary.

As an analyst of Middle East affairs focusing on Iran, I believe that these conditions place Khamenei’s regime under greater threat today than perhaps any other time in its 46-year history.

Protesters and security forces clash in Tehran’s Grand Bazaar in a video released on Jan. 6, 2026.

Growing threats, internal and external

If Khamenei hopes to survive politically or mortally, I believe he has three options.

First, he could capitulate to U.S. demands to halt Iran’s nuclear enrichment program. Second, Iran could sprint toward a nuclear bomb. Lastly, he could flee.

In hopes of restoring deterrence, Khamenei could also continue rebuilding his country’s military capabilities, which were significantly degraded during the June 2025 12-day war in which Israel and the U.S. aimed to destroy Iran’s nuclear capability.

Israel is eager to stifle Iran’s reconstitution plans, protests are spreading and growing more intense, and Trump – through hostile rhetoric and offensive military action – has put Khamenei on notice.

Khameini’s problems aren’t his alone. The revolutionary theocratic system of government that he leads is in danger of falling. And his military and internal security apparatus may not have the time or ability to address its growing and interrelated internal and external threats simultaneously.

There are two fundamental factors analysts like me consider when assessing enemy threats: offensive capability to inflict damage and hostile intentions to use these capabilities to harm enemies.

Determining offensive capability involves evaluating the quality of a country or organization’s complete arsenal – air, ground, maritime, cyber and space capabilities – and how trained, disciplined, integrated and lethal their forces might be. Determining intentions involves evaluating if, when and under what conditions offensive capabilities will be used to achieve their goals.

If states hope to survive when they come under such pressure, their defense strategy should account for differences between their own military capability and the enemy’s, especially if enemies intend to attack. Or states need to convince enemies to be less hostile, if possible.

Maduro’s mistake was his inability to defend against a far superior U.S. military capability while believing that U.S. leaders would not remove him from office. Maduro gambled and lost.

Bad choices

Iran’s supreme leader faces a similar conundrum: First, there is no foreseeable path that allows Tehran to produce or acquire the military capabilities necessary to deter Israel or defeat the United States, unless Iran develops a nuclear weapon.

And decades of mutual hostility, the memory of Iran’s once-clandestine nuclear weaponization program and recent Iranian lawmaker calls to develop nuclear bombs minimizes the prospect that U.S. leaders view Khamenei’s intentions as anything but hostile.

But as the clear weaker party, it is in Tehran’s interest to change Trump’s mind about Tehran’s hostile intent. The way to do that would be by abandoning nuclear enrichment.

In terms of threat analysis, the regime’s oft-repeated chants of “Death to America” and “Death to Israel” perhaps have sent an easily misinterpreted message: that Iran’s hostile leaders intend to destroy the U.S. and Israel. But they simply lack the capability, for now.

President Theodore Roosevelt famously said “speak softly and carry a big stick; you will go far.” Today, he might say that Khamenei is unwise for speaking with such vitriol considering the size of Iran’s stick. The United States and Israel possess military capabilities far superior to Iran’s – as demonstrated by the 12-day war – but they did not then share the same intent. Though both Israel and the U.S. operations shared the objective of neutralizing Iran’s nuclear capability, Israel’s objectives were more broad and included targeting senior Iranian leaders and destabilizing the regime.

To Khamenei’s momentary personal and institutional fortune, Trump immediately called for a ceasefire following U.S. B-2 strikes on Iranian nuclear facilities, delineating the United States’ narrower objectives that at the time did not include regime change in Iran.

But that was before U.S. forces removed Maduro from Caracas and before the outbreak of protests in Iran, both of which coincide with Israel’s signaling preparations for Round 2 against Iran.

A fighter jet taxiing behind a person holding lights.
Israel is telegraphing its ambitions for another attack on Iran; fighter jets like this taxiing F-16I would likely be part of Israel’s next campaign.
Israel Defense Forces (IDF) / Handout/Anadolu via Getty Images)

Iran without Khamenei?

During Trump’s Dec. 29 press conference at Mar-a-Lago with Israeli Prime Minister Benjamin Netanyahu, he warned that the U.S. could “knock the hell” out of Iran if the country reconstitutes its nuclear facilities.

This is separate from the ominuous warning that the U.S. could intervene on behalf of Iranian protesters; it would almost certainly differ in scale.

Nevertheless, a potential U.S. intervention could embolden protesters and further undermine and destabilize the Islamic Republic regime. Khamenei has predictably scoffed at and dismissed Trump’s warning.

I believe this is a serious mistake.

Secretary of State Marco Rubio warned on Jan. 3, 2025, that Khameini should not “play games” as Maduro did. Khamenei, Rubio said, should take Trump’s warnings seriously. I agree.

If Iran refrains from violent crackdowns on protesters, there is a chance that anti-government protestors overthrow the government. But the supreme leader’s chances of surviving a popular uprising are probably greater than surviving an unbridled U.S. or Israeli military intent on ushering in a new – post-Islamic Republic – Iran.

Otherwise, Khamenei has to address superior U.S. and Israeli military capability, quickly. But Iran is broke, and even if sanctions were not continuously strangling Iran economically, the country could probably never purchase its way to military parity with the U.S. or Israel.

Alternatively, Iran could determine that it must move quickly to develop a nuclear weapon to mitigate U.S. and Israeli military capabilities and deter future aggression. However, it is extremely unlikely Iran could do this without U.S. and Israeli intelligence discovering the project, which would immediately trigger an overwhelming military campaign that would likely expedite regime change in Iran.

And like Maduro, the supreme leader is utterly alone. None of Maduro’s closest partners – China, Russia, Cuba and even Iran – were willing to fight in his defense, despite weeks of forewarning and U.S. military buildup near Venezuela.

Under these circumstances, it may be impossible for Khamenei to address overwhelming U.S. and Israeli military capabilities. He could, however, reduce the threat by doing what is necessary to ensure the United States’ objectives for Iran remain narrow and focused on the nuclear program, which may also keep Israel at bay.

However, Khamenei would have to demonstrate unprecedented restraint from cracking down violently on protesters and a willingness to give up nuclear enrichment. Due to historical animosity and distrust toward the U.S., both are unlikely, increasing, I believe, the probability of a forthcoming Iran without Khamenei.The Conversation

Aaron Pilkington, Fellow at the Center for Middle East Studies, University of Denver

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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