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).
Opposition Leader Sussan Ley has sacked Jacinta Nampijinpa Price from the shadow ministry, citing the senator’s failure to endorse her leadership as well as her refusal to apologise over her comment about Indian immigrants.
The battle with Price came to a head late on Wednesday, after Price declined to express conference in Ley’s leadership when pressed by reporters in Perth. Price said that was “a matter for our party room”.
Ley told a press conference in Hobart: “Today, Senator Jacinta Nampijinpa Price critically failed to provide confidence in my leadership of the Liberal Party. Confidence in the Leader is a requirement for serving in the shadow ministry”.
Ley also said despite being given “the time and space to apologise” for her remarks about Indian immigration, Price “did not offer an apology today – and many Australians, not just of Indian heritage, have been calling for that apology – for remarks that were deeply hurtful”.
Last week Price said the Labor Party encouraged Indian immigrants because they voted for it. She has subiquently walked back her position but steadfastly refused calls from within and outside the Liberal Party to apologise for them.
Ley said: “My team and I have been out listening to Australians of Indian heritage and we have heard their response and the pain and hurt that these remarks provided for them.”
After Ley told her she was out of the shadow ministry, Price said in a statement, “this has been a disappointing episode for the Liberal Party. I will learn from it. I’m sure others will too. No individual is bigger than a party. And I’m sure events of the past week will ultimately make our party stronger.”
Price has been shadow minister for defence industry. She defected from the Nationals to the Liberals after the election, hoping to become deputy opposition leader on a ticket with Angus Taylor. In the event, she did not contest the deputy position after Taylor lost to Ley.
Price’s relegation to the backbench leaves her free to speak out, not just on immigration issues but on many other issues as well, including the party debate on its commitment to net zero greenhouse emissions.
Ley hopes her action against Price will shore up her authority in the party, but it remains to be seen whether it could instead be destabilising for her.
The bipartisanship about the path to a long-term settlement in the Middle East has finally been irrevocably broken.
The shadow cabinet, meeting Tuesday morning, did not just confirm the Coalition’s disagreement with the government’s decision to recognise a Palestinian state. It also decided that recognition would be revoked by a Coalition government.
In a statement after the shadow cabinet, Opposition Leader Sussan Ley and the shadow foreign minister, Michaelia Cash, said: “A Coalition government would only recognise a Palestine state at the conclusion of a proper peace process”.
On Monday, Prime Minister Anthony Albanese announced Australia would recognise a Palestinian state at the United Nations General Assembly next month. The government is not putting preconditions on recognition, but is relying on assurances the Palestinian Authority has given.
In its statement, the opposition said Albanese had specified recognition was “predicated on there being no role for Hamas; the demilitarisation of Palestine; an acknowledgement of Israel’s right to exist; free and fair elections in Palestine; and, reform of [Palestinian] governance, financial transparency and the education system, including international oversight to guard against the incitement of violence and hatred”.
But, the Coalition said, “unfortunately the Albanese government has made it clear that they will still recognise a Palestinian state, regardless of whether or not their own conditions are met.”
Former Prime Minister Scott Morrison said that in government, the Coalition had listed Hamas as a terrorist organisation. “Our Labor successors have regrettably rewarded them through this action.
“I know this is not their intention, but it is the result. The caravan of appeasement is not one we should join”, Morrison said on his website.
While the split in bipartisanship has come to a head this week, it has been in the making for a considerable time.
The Coalition has been steadfastly rusted onto Israel (despite having some members, including Ley, who in the past had expressed support for the Palestinians).
In recent years, Labor has become increasingly divided between those wanting to stick to its traditional alignment with Israel and a growing number of pro-Palestinian supporters, who eventually succeeded in getting recognition of a Palestinian state into the party’s platform.
In the recent election, the Liberals pitched to and attracted many Jewish voters, while Labor was concerned with keeping the support of its Muslim constituency, located especially in western Sydney.
The government’s criticism of Israel’s approach to the war has intensified as the conflict has dragged on with no sign of resolution.
Once the current conflict reached its present impasse, with ever-more graphic footage of the suffering in Gaza, and countries such as France, Britain and Canada signalling Palestinian recognition, it was almost inevitable the Albanese government would follow, and the Coalition would oppose that decision.
The government argues something has to be done. It chooses to believe assurances given by the Palestinian Authority. It speaks as though the intractable players in this Middle East conflict can be influenced, even though the ongoing conflict makes this a heroic assumption.
Albanese undertook a round of Tuesday interviews to defend the government’s decision. Often reluctant to spell out the content of private conversations with overseas counterparts, the prime minister is being expansive about his conversation last Thursday with Israeli Prime Minister Benjamin Netanyahu.
“It was a conversation which reflected the conversation that I had with him in 2024. And I expressed to him my concern that he was putting the same argument that he did in 2024, that military action against Hamas would produce an outcome. That hasn’t produced an outcome. What it’s produced is a lot of innocent lives, tens of thousands of innocent lives being lost.
“I expressed my concern about the blocking of aid that occurred as a conscious decision by the Israeli government earlier this year,” Albanese said.
“He again reiterated to me what he has said publicly as well, which is to be in denial about the consequences that are occurring for innocent people.”
Treasurer Jim Chalmers has been putting it succinctly, declaring it’s a question of when, not if, Australia recognises Palestine as a state.
It’s a line Foreign Minister Penny Wong used more than a year ago. This week Wong was sounding impatient. “The reason for urgency behind recognition is this. There is a risk there will be no Palestine left to recognise if the world does not act,” she said.
For the government, recognition is as much about domestic politics as foreign policy. Australia has no influence on what’s happening in the Middle East (other than donating aid). But the Australian public is increasingly horrified by the images of the humanitarian crisis.
It’s a reminder of the power of the visual. More than half a century ago, the pictures coming out of Vietnam helped turn the US public against that war.
Right now, however, Australia remains in limbo on its journey towards recognition. The destination might seem clear but the exact arrival date is less so.
Observers are expecting it by the time of the United Nations General Assembly in late September. Anthony Albanese will be there, delivering an address during leaders’ week. The announcement could be made in the run up, or in that week.
France, the United Kingdom and Canada have all flagged recognition, the latter two with varying conditions attached.
Asked in late July about whether Australia would announce recognition at the UN, Albanese said Australia would make a decision “at an appropriate time”.
“We won’t do any decision as a gesture. We will do it as a way forward if the circumstances are met,” he said. He spelled out a couple of these. “How do you exclude Hamas from any involvement there? How do you ensure that a Palestinian state operates in an appropriate way which does not threaten the existence of Israel?”
In any likely scenario, there will be no positive answers to those questions in the foreseeable future. Nor does there seem, so far, much chance the Netanyahu government in Israel will take much notice of more countries recognising Palestine. The only country, if any, it appears likely to be influenced by is the United States, and President Donald Trump’s future actions are unpredictable.
But, leaving aside the prime minister’s longstanding personal pro-Palestinian views, Albanese has to be seen to be doing something. Pressure has been long mounting in the Labor base and among the party membership for recognition. The Sydney Harbour Bridge march last weekend, attracting at least some 90,000 people (march organisers estimated many more), reemphasised to Albanese that he needs to be in tune with his base on this issue.
An instructive lesson comes from the situation in which NSW Labor Premier Chris Minns finds himself. Minns and the NSW police opposed the march going over the bridge on the grounds it would be too disruptive – they were overridden by a court decision. But ten of Minns’ caucus members marched, including environment minister Penny Sharpe.
In the federal caucus, Ed Husic, now on the backbench, is out in front on Palestine recognition. But whatever impatience there may be in caucus generally about the government’s perceived slowness, it is so far being contained. Still, Albanese won’t want to lag behind his colleagues on what is an electorally sensitive issue for Labor in some seats.
As the government prepares its timing, Albanese has embarked on a diplomatic round. It was not unexpected that he spoke with French President Emmanuel Macron this week. More surprising was his phone call with the Palestine Authority’s President Mahmoud Abbas, who is widely regarded as a discredited figure.
According to the official readout from the Prime Minister’s Office, Albanese “reiterated Australia’s call for the immediate entry of aid to meet needs of people of Gaza, a permanent ceasefire, and the release of all hostages”.
Albanese “also reinforced Australia’s commitment to a two state solution because a just and lasting peace depends upon it”. Abbas thanked the PM “for Australia’s economic and humanitarian support. The leaders discussed deepening cooperation across a range of areas, and agreed to meet on the sidelines of the United Nations General Assembly.”
If Albanese made the point directly to Abbas that the Palestinian Authority needed to reform itself to have a role in a future Palestinian state, it was not recorded in the readout. But Albanese did tell a news conference on Thursday, “We as well want to see commitments from the Palestinian Authority, commitments of their governance reforms, of reforms in education, reforms across a whole range of issues”.
Before that conversation, Albanese had sought a call with Israeli Prime Minister Benjamin Netanyahu. As of Thursday, the call had not yet come.
Israeli authorities can be quick to respond to what they see as anti-Israel events in Australia. There was a social media post from the Israeli foreign minister after the bridge march, urging Australians to “wake up”.
On Thursday, Albanese was asked whether he would talk with Trump before he made the decision about Palestinian recognition. “We’re a sovereign government and Australia makes decisions on behalf of the Australian government,” he said.
Incidentally, while there has been speculation that Albanese will catch up with Trump when he is in the US in September, there don’t seem any locked-in plans.
It’s hard to get the president’s time in Washington when so many leaders are knocking on the White House door in September. And there is no guarantee the president will be in New York during the leaders’ week at the UN, or have an opportunity for a meeting if he is. When the prime minister will catch up with the president continues to be a work in progress.
The opposition, which has remained steadfastly signed up to Israel, strongly opposes Palestinian recognition, saying this would be a win for Hamas. But at least some Liberals are readjusting their rhetoric to take more account of the humanitarian disaster in Gaza.
If, or when, Labor recognises a Palestinian state, the opposition would condemn the decision. But what would it say about whether a Coalition government would reverse the decision? That might be one for the convenient line, “we’d look at that when we were in office”.
