If Trump’s 2016 election represented a step into the unknown for Australia, his re-election would represent a significant escalation of economic risks.
In the short term, Trump’s mishandling of the pandemic, which has cost at least 200,000 American lives, would continue on into 2021, further undermining the US economy and global growth. Without an effective vaccine, a re-elected Trump administration means continuing US waves of coronavirus and lower global growth, with flow-on effects for Australian exporters and increased risks to the global financial system.
But it’s two more deliberate Trump policies that pose longer-term problems for Australia.
A continuation of climate inaction by the US undermines the chances of effective international co-operation to limit increases in global temperatures. While the climate denialist Morrison government is preventing meaningful action to reduce Australian emissions, as the developed country most exposed to climate change, Australia needs concerted international action to reduce global carbon emissions if it is to avoid significant damage to long-term growth.
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A re-elected Trump administration would materially reduce the chances of effective international action, especially as the election occurs at a key moment when the EU has indicated an intention to levy carbon tariffs on countries, like Australia, that fail to take meaningful action to reduce emissions, and China has pledged to be carbon-neutral by 2060. With Biden promising to rejoin the Paris Accord, which currently represents the most effective vehicle for concerted international action, November looms as a key moment in Australia’s long-term economic future.
Four more years of Trump will also further destabilise the international trading system. As a relatively small, open, export-oriented economy, Australia depends heavily on major economies adhering to a basic structure around trade and tariffs, even if — when it comes to anti-dumping — Australia has its own protectionist flaws.
Trump has systematically undermined the World Trade Organisation, prevented its appellate process from functioning at all, unilaterally rewritten trade agreements, repeatedly threatened a trade war with Europe, and actually started a trade war with China — a key reason identified by the United Nations for a marked reduction in international trade in 2019. This had an initial direct impact on world growth of around 0.3%, which in turn affects the Australian economy and exports.
But when countries depart from a rules-based trade order, others tend to retaliate and the broader international system starts to disintegrate. China, which responded to Trump’s repeated imposition of new tariffs with its own retaliatory tariffs, has begun using anti-dumping measures (long exploited by Australia against China) against us, making trade a now-standard part of foreign policy.
The return to fashion of onshore manufacturing in the wake of COVID-19, and the growing reaction to Chinese belligerence, will only accelerate the disintegration of an effective global trade framework.
Australia has relied on maintaining strong personal relations with Trump in order to avoid becoming collateral damage in his trade conflicts, and has so far been adept at dodging various bullets fired by the White House. But with a figure as arbitrary and inconsistent as Trump, that luck may not hold out. Australia is now reduced to plaintively urging, via Washington ambassador Arthur Sinodinos, a US return to the discredited Trans-Pacific Partnership.
A Biden administration is unlikely to be significantly less protectionist than Trump’s, but Biden is more likely to end the active undermining of international trade rules by the world’s biggest economy, which both threatens world growth and the exports of smaller economies like our own.
With Biden and Trump competing to see who can be more Sinophobic, there’s also unlikely to be any de-escalation of tensions with China; the process of “decoupling” in industries like communications and media is likely to continue. That’s something of a non-issue for Australia, however, given our relations with Beijing are already at a post-Whitlam nadir.
A Biden administration might mean less overt pressure on Australia to play deputy sheriff against China, but despite the claims of the China Lobby, the Morrison government has run its own race on China, even if that’s been a distinction without a difference as far as the Communist autocracy goes. But it might also mean more consistency in policy, with Australia less likely to be stranded by a sudden whim of Trump’s to re-embrace his “friend”, the “incredible guy” Xi Jinping.
But even if Trump loses, the forces within the United States that created him will remain: isolationism, hostility to free trade, racism and an impetus to division and conflict, all fueled by super-wealthy elites agile at exploiting the US political system to obtain results that further strengthen their position. None of that augurs well for Australia’s long-term economic interests.