First, the tariffs from China hit Australian exporters now it’s the Trump tariffs on steel and aluminium – and as we have just learnt there will be no exemption.

How will these measures affect the USA, but also China, Australia and the rest of the global economy?

Like the China COVID tariffs, the Trump tariffs will hurt Australian workers. 

After all, 1 in 5 Australian workers depend on exporters and exporters pay 60 per cent higher wages on average than non-exporters in union jobs with EBAs. This will be bad for the steel workers of the Illawarra and the aluminium workers of Portland, and will also be inflationary, and put upward pressure on interest rates. That’s why we have seen the impact of tariff decisions (and tariff uncertainty) hitting the Australian share market and superannuation balances.

As a former Australian Prime Minister, could Ambassador Kevin Rudd got an exemption? I am sure he’s trying. But his pre-election comments disparaging Trump have not helped Australia’s interests not have the recent comments of another former Prime Minister Malcolm Turnbull. But to be fair, both Rudd and Turnbull have also been critical of Beijing. 

Of course, Australia is not alone. The USA’s North America closet trading partner, Canada is in the same boat, as is Mexico. Canada has just had a leadership election with former Bank of Canada Governor Mark Carney (who was also Bank of England Governor) taking over as Prime Minister of Canada from Justin Trudeau. The Canadian Tories led by Pierre Poilievre are going to paint Carney as a Globalist, more comfortable in Switzerland than Saskatoon, but the tariffs on Canada give the new Prime Minister a chance to wrap himself in the Maple Leaf and fight the Trump tariffs. Carney can also paint Poilievre as Trump lite, and improve the Liberals chances in a contest suffering from the unpopularity of Trudeau. When a central banker can replaced a charismatic second-generation politician as Prime Minister and have a better chance we know we are living in interesting times. 

With China and the USA unreliable trade partners, what options does Australia have? The Albanese Labor Government, to their credit have improved relations with our North East Asian trading partners like Japan and South Korea, Taiwan, ASEAN (with the special Australia ASEAN summit in Melbourne last year) as well as Europe and the emerging markets of the Middle East and North Africa (MENA) and Latin America.

We could actually get closer to Canada under their new Prime Minister, given our similar economic and political backgrounds (if not geography) and current situation on steel and aluminium tariffs. Canada has also had its issues with Beijing as well as Washington.

So forget the tyranny of distance, and May the Moose be with you.

Professor Tim Harcourt is the Chief Economist of IPPG at University of Technology Sydney (UTS) and host of The Airport Economist on Ticker.

Tim is also former chief economist of the Australian Trade Commission (AUSTRADE), the Australian Council of Trade Unions (ACTU) and the Reserve Bank of Australia (RBA).