Trump and Australia: Brass Monkey Weather

Canberra shivers in US’s new world

By: Hamish McDonald

Albanese pleads his case

Australia is a long way from Munich, where the Trump administration has just shocked European allies with Neville Chamberlain-like concessions to Russia. It has a long-standing trade deficit with the United States, raising hopes it will escape his tariff swipes. And it has only indirect stakes in the Middle East through its religious and migrant minorities. Yet as Trump keeps up his barrage of surprise announcements and his contentious cabinet appointments are confirmed by the Senate, deep unease is running in Canberra about both bilateral matters and the wide impact in Asia and the Pacific.

“In accepting Ukraine might eventually return to Russia, Trump is implicitly accepting China’s claims on Taiwan,” wrote retired Australian army general Mick Ryan in The Sydney Morning Herald. “In delivering mixed messages on Ukraine negotiations, he is building the environment for misunderstanding and gross strategic miscalculations by China and others in our region.”

“The decreasing trust that US allies have in America means Putin and Xi have more gaps between America and its friends to exploit,” Ryan said. “For Australia, the last massive transformation in our security outlook occurred after the fall of Singapore. It was the final nail in the coffin for the imperial defense strategy. We may be on the verge of another once-in-a-century security realignment.”

Would Trump cut and deal and hand over Taiwan anyway, some wonder. “Taiwan is 9,500 miles away. It’s 68 miles away from China,” he said last July, adding that Taiwan “took our chip business from us. I mean, how stupid are we?” Thinking aloud further, he said “immensely wealthy” Taiwan should be paying the US for protection. “I don’t think we’re any different from an insurance policy. Why? Why are we doing this?”

Peter Varghese, formerly head of Australia’s foreign affairs department and its top intelligence body and currently chancellor of the University of Queensland, said America was starting to look no better than its rivals.

“Donald Trump may achieve what 75 years of post-war Americanism could not: concede the case for moral equivalence,” he wrote in the Australian Financial Review. “Moral equivalence was the accusation that for all America’s claims to the ethical high ground, it was in practice no better than its authoritarian enemies.”

Both Ryan and Varghese pointed to Trump’s ambivalence towards US allies and drew the lesson of diminished strategic trust. “If the US position is now to identify what you can do for the US and then use all its considerable leverage to ensure it is done, where does it leave our historical dependence on the US as the last resort defender of Australia?” Varghese said. “Perhaps Trump has done us a huge favor by underlining the need for us to do more to defend ourselves.”

One immediate impact may be in the intelligence sphere, resulting from moves to politicize US agencies. The apolitical professionalism of the US national security bureaucracy was one important safeguard in Trump’s first term and Australia’s alliance rested on its integrity, warned Australian strategic analyst Ben Scott soon after Trump’s re-election. “But his politicization of the Pentagon, the Department of Justice, the FBI, and other intelligence agencies will necessarily impinge on the close networks of Australia-US cooperation that were least affected during his first term.”

Should Trump make a new, more concerted attack on that apparatus, Scott said, Australia might need to make discreet changes in security and intelligence cooperation and start looking at the US in a new way. In other words, America’s Five Eyes intelligence partners might become wary of sharing their secrets with Washington and distrustful of what they are told.

Australian foreign policy circles also worry about the flow-on from new US tariffs on world trade, particularly those on China. Australian exports are dependent on growth in the Chinese economy itself. But a secondary effect could come via other big trading partners like Japan, South Korea, and Southeast Asia.

“It will be no win for the Trump administration if its policy on China alienates Southeast Asia,” said John McCarthy, former Australian ambassador to Indonesia, Japan, India, and the US. “It is not in the Australian interest if the United States loses hearts and minds in this – the most important – contested area between the two great powers.”

Trump’s foreign aid freeze and threatened dismantling of the USAID agency is also a concern in Australia. “The US aid freeze won’t break the Pacific, but it will create unnecessary disruptions,” says Alexandre Dayant of Sydney’s Lowy Institute. “For Southeast Asia, the consequences are mixed, likely to hit Myanmar and Cambodia hardest, as well as those sectors more broadly across the region where US aid plays an important role, especially in support for civil society.”

Over the past decade, the US has been the fifth-largest bilateral donor to the Pacific, after Australia, China, Japan, and New Zealand, but about 83 percent of its US$2 billion aid has gone to the three Northern Pacific states – the Marshall Islands, Micronesia, and Palau – that are in compacts of free association with the US. It is unclear whether this support will be cut.

Excluding these three states, the US drops to the eleventh-largest bilateral donor, contributing just 0.8 percent of Pacific aid, or US$37 million per year, a bit over half managed by USAID. Dayant says the biggest sector at risk is health, where US assistance – roughly US$8 million annually – primarily funds HIV/AIDS programs and basic health services in Papua New Guinea and other Melanesian countries.

For Southeast Asia, the US is the fifth largest bilateral development partner, contributing 4 percent of total development funding and spending $10 billion since 2015. Nearly half goes to larger economies notably Indonesia and the Philippines, where aid accounts for a small portion of government revenues. “In these nations, the suspension may barely register,” Dayant says. “But freezing aid funding could weaken civil society. Governance initiatives – accounting for 22 percent of US aid – support civil society, law enforcement, and judicial systems in a region where democracy is already retreating.”

For Australia’s immediate bilateral interests, it was widely assumed that with the deft handling of Trump, Australia would be safely below the radar on trade, as it was in his first term. It imports twice as much from the US (US$42 billion) as it exports the other way (US$21 billion). But in early February Trump announced a blanket 25 percent tariff on imports of steel and aluminum, with no exemptions. These are two large elements of Australian exports to the US, though each is a minor part of US imports.

Albanese got on the phone with Trump for the first time since a congratulatory call after the November election. It seemed to go well. Trump said he found Albanese a “fine fellow” and Australia “one of the few” without a surplus in US trade. But beyond that, his signals were mixed. After the conversation, he declared there would be "no exceptions or exemptions" while simultaneously stating he told Albanese he would give "great consideration" to an exemption for Australia due to its trade deficit with the US.

Then a day later, Trump’s trade adviser Peter Navarro weighed in. "Australia is just killing our aluminium market," he told CNN. "President Trump says no, no, we're not, we're not doing that anymore." He said Australia was “flooding” the American market, citing year-to-year surges in volumes, and worse: “The major companies in Australia are held – majority owned by – the largest shareholder is China.”

Analysts here were at pains to point out that the 97,421 metric tonnes of aluminium shipped to the US from Australia were far below the 3,288,315 tonnes from the top source Canada, the 392,080 from the United Arab Emirates, and the 238,425 from Korea. Bahrain, China, Argentina, and India all exported far more aluminium to the US than Australia. And the largest Chinese stake in Australian producers was the 14.5 percent holding by Chinalco in British-Australian multinational Rio Tinto, with America’s Alcoa the majority owner of the other producer.

Australia may wriggle out, said Jenny Gordon, a leading international economy specialist in Canberra. “But Trump’s tariffs are not just (or even) about economics,” she wrote for The Lowy Institute. “They are about coercion. The purpose of China’s sanctions was never clear, more a warning shot to other countries to not offend China’s sensibilities. Trump is likely to be much more explicit in what he wants.”

“So what is Australia doing that US interests might be unhappy about?” Gordon said. “The social media ban for under 16-year-olds comes immediately to mind.” Others suggest red rags for the Trump camp could be Australia’s backing for UN resolutions supporting Palestinians, climate change and renewable energy policies, its support for the International Criminal Court, its support for Ukraine, its gun control, vaccinations, its abortion laws, and its diversity policies.

More than trade, defense is where Trump could turn the screws. Even though Australia already runs a defense force closely integrated with the US and hosts US installations likely to be targeted in a conflict with China, since 2021 it has pinned its defense planning on the so-called AUKUS submarine agreement, whereby the US is supposed to transfer three to five Virginia-class nuclear-powered attack submarines to the Australian navy in the 2030s, to be augmented and replaced later by a new class developed with Britain.

Many senior Australian foreign policy and defense experts think the plan is unworkable. “Between now and 2032, the US Navy will drop from 49 nuclear-powered attack submarines (SSN) to 32-35,” said retired admiral Peter Briggs, a former submarine commander. “The US will not have sufficient SSNs to be able to sell Australia three to five Virginia Class submarines.”

“The concept mixes two versions of the Virginia class SSN with a third, new UK design,” Briggs notes further. “This is unworkable logistically and impractical for Australia. A force of eight SSNs is below critical mass for generating the experienced personnel needed to oversee its operation and is inadequate for Australia’s three-ocean needs (Pacific, Indian, and Antarctic Oceans). Australia will find it too expensive in manpower and funds to operate eight large SSNs, let alone the minimum force of 12 SSNs required for a sustainable force able to provide up to four deployable SSNs.”

Still, Australian defense minister Richard Marles went to Washington to plead for the AUKUS submarine deal with new US defense secretary Pete Hegseth. He took a check for A$800 million (US$508 million), the first installment of the US$3 billion that Canberra is to pay towards expanding submarine production at US shipyards.

Asked whether he had sought assurances Trump would not ask Australia to put more into propping up American shipbuilding, Marles did not reply directly, saying Australia’s subsidy was a “very unique” arrangement not replicated in other defense pacts globally.

For his part, Hegseth said, “the president is very aware [and] supportive of AUKUS.” He was asked if the US Navy could spare the nuclear submarines on time. “We sure hope so,” Hegseth said.

Hamish McDonald is a former regional editor of the now-defunct Far Eastern Economic Review and former foreign editor of The Sydney Morning Herald