Australian Dollar

Trump’s election also resulted in an early decline for the Australian dollar; It fell 1.5 cents against the dollar in the hours after Trump’s victory.

On November 7, the day after Trump’s victory, the Australian dollar fell to 66 cents, the lowest since August.

This follows a decline in the price of gold due to the strengthening of the US dollar and expectations that inflation and interest rates may remain high or not fall as quickly during Trump’s presidency.

RBA deputy head of financial markets Christopher Kent said in a budget forecast that Trump’s tariffs would potentially push the US dollar higher (and push other currencies lower).

“We don’t know how big these will be and to whom they will apply, but they should push the US dollar higher because US customers will buy fewer goods from the rest of the world and need less foreign currency,” he said. .

Trade Tariffs

This brings us to tariffs. Australia signed a free trade agreement with the United States nearly two decades ago; In this agreement almost 97% of our imports are now duty free.

Trump has long promised a radical protectionist stance that would impose trade tariffs of 10 percent to 20 percent on global imports and a 60 percent tariff on goods from China. It’s worth noting that Australia narrowly avoided new tariffs on domestically produced steel during the first Trump administration.

Experts now warn that direct tariffs on imports to the US could not only hurt Australia’s exports but could also trigger a trade war between the US and China. China is Australia’s largest trading partner – accounting for almost a third of our two-way trade – which puts Australia “in the crossfire”, as former US ambassador Arthur Sinodinos put it.

“If we have international trade wars, that will have an impact on global trade and investment,” he told the ABC.

“If (Trump) can enact the full program it will flow to Australia because of its impact on the Chinese economy.”

George Washington University economist Steven Hamilton said the economy would likely be worse off under Trump.

“You can’t just put a 10% to 20% tax on everything and expect inflation to go down,” Hamilton told the ABC.

“Tariffs will hurt US consumers and increase prices. There will be flow-on effects for other countries.

“It will also impact Australia via China: if you put a 60% tariff on Chinese goods, they will produce a lot less goods and they will want a lot less (of Australia). iron ore.”

Will AUKUS Be Scrapped?

One of the biggest signature defense agreements of recent times was the AUKUS pact, a tripartite agreement between Australia, the US and the UK. Central to the agreement is the provision of sovereign nuclear-powered submarines, including the transfer of Virginia-class submarines from the US to Australia.

Trump has a history of withdrawing from multilateral agreements that he sees as damaging to the United States (the most notable being the Paris climate accord).

Some experts are now wondering whether the AUKUS deal will end up on the cutting room floor, which would be no problem for lobby group Labor Against the War, which has called on the government to scrap the deal.

“It is completely untenable for Australia to continue acting in lockstep with a militarized US government led by an unstable president,” spokesman Marcus Strom said.

But Hockey believes not much will change in terms of Australia’s defense ties.

“Donald Trump has a very positive view of Australia on issues such as national security. “I think this will be reflected in AUKUS and he will not want to change his relationship with AUKUS,” he said.