Trump’s administration may impose 60% tariffs on Chinese imports and up to 20% on imports from other economies, including Australia.
Micaela Fuchila, chief economist at Jarden, warned that this could trigger a new trade war, posing a risk to Australia’s economy. Declines in Chinese manufacturing could reduce demand for Australian exports.
The Trump administration has appointed long-time critics of China to key positions, raising concerns about trade relations.
If tariffs are enacted, Fuchila noted that trade frictions could weaken the Australian dollar, similar to effects seen during Trump’s first term. Recently, the currency fell below US65¢, reaching a six-month low against the US dollar.
While US tariffs on Australian goods are expected to have minimal impact on the $115 billion trade relationship, they could lower Australian GDP by 0.1 percentage points over a year.
The crucial factor remains the US-China relationship. Iron ore prices dropped by around 1% to $US97.30 per tonne, marking the lowest level in six weeks, despite gains in U.S. industrial and technology sectors.
S&P/ASX 200 Index futures are trading 26 points, or 0.3%, lower at 8296 points ahead of Monday’s market reopening.
