Tariff rebuff feeds into debate about how Australia handles Donald Trump

Anthony Albanese didn’t mince words in responding to Donald Trump’s refusal to grant Australia an exemption from the United States’ tariff on aluminium and steel. “This is not a friendly act,” the prime minister declared bluntly.

It’s hard to think when an Australian government has used such strong language about the United States.

The not-unexpected decision is less important for itself – we only export $800 million-plus worth of aluminium and steel annually to the US – than for its wider implications and portends. These are economic and political, but how far reaching they’ll be is near-impossible to predict.

Australia could be hit by future tariffs Trump has in mind. More generally, if the American tariffs trigger an international trade war, that will have serious fallout for us.

An even more basic question is: will the realignment the Trump administration is bringing to the US’s international outlook lead to a weakening in the Australian-American relationship?

There are differing views on how Australia should view the Trump era.

One approach suggests assuming (or hoping) the Australia-US relationship is so grounded in common interest, military ties and history that things will return to normal after a few disruptive years.

Another view says we must accept the US is becoming an unreliable partner and that, while its national interest might mean it would come to Australia’s aid if needed, we have less reason than before to assume it would do so. On this view, Australia has to put aside the old “great and powerful friends” mindset and understand it is likely to be much more on its own than it has previously thought.

Crossbencher Jacqui Lambie says, “America is no longer a reliable ally – hopefully that will change, but in the meantime we can’t keep assuming that America has our back, Trump clearly doesn’t have anyone’s back except his own”.

Similarly, there are varying opinions on how an Australian government should approach the Trump administration. Some argue, don’t poke the bear. Others say, stand up to a bully.

Albanese started by attempting an accommodating stance. He said he wouldn’t provide a running commentary on the president’s statements. He emphasised the positives from his February phone call with Trump, in which he argued the case for an Australian exemption and Trump said he would consider it.

The softly-softly line was not surprising when Australia was hoping for a carve out. But having found the special Australia-US relationship doesn’t make us “special”, now Albanese and his government are not pulling their punches, at least in their rhetoric. Albanese said the tariff rebuff was “against the spirit of our two nations’ enduring friendship”. Industry Minister Ed Husic went a lot further: “Let’s call a spade a spade. I think this is a dog act after over a century of friendship.”

Wisely, the government won’t retaliate with reciprocal tariffs, which it rightly says would only be self-defeating, hurting Australian consumers.

The government insists it will fight on for the exemption but success is surely unlikely (with the caveat nothing is certain with Trump).

In the difficult economic times looming, Australia will need where possible to team up with friends. Lowy Institute’s lead economist Roland Rajah points to potential opportunities to work with like-minded countries, including the Europeans, Japan and Canada for common interests. He notes Australia’s collaboration with other nations during Trump’s first term to push for a Trans-Pacific trade agreement after the US pulled out.

The Coalition immediately jumped on the US rebuff to argue it showed Albanese’s weakness, highlighted by the PM being unable to obtain another call with Trump.

“I want to make sure that we’re a government that can deal with our trading partners effectively and clearly the prime minister hasn’t been able to do this,” Peter Dutton said.

Dutton points to the Coalition’s success in getting an exemption under Trump Mark 1. It’s a more convenient than convincing argument. Joe Hockey, who was ambassador, reported how unhappy American officials were with that carve out. Given the universality of this tariff, there is no evidence there was any way of avoiding it.

Trade Minister Don Farrell is likely right in saying the administration probably decided from the start against exemptions.

When pressed on how the Coalition would have dealt with the issue, Dutton said: “We would have looked at a more comprehensive trade deal with the United States, I think in relation to the civil nuclear industry, in relation to rare earths and critical minerals. There is an enormous play for us in that space.”

Dutton is presumably putting this forward as what the Coalition, if elected in May, would pitch to the Americans.

The longer-term response from either side of politics to the Trump administration on key issues is not clear.

How would the Albanese government deal with US pressure to lift defence spending more or faster than the present plan of taking it from about 2% of GDP to around 2.4% by 2033-34?

Former Labor defence minister Kim Beazley told The Australian, “we do have to bear in mind what Trump’s saying and the others are saying. We have to up our spending to 3, 3.5%”.

We don’t know how high the Coalition would push defence spending. It is committed to an increase beyond Labor’s, but is yet to provide detail.

Malcolm Turnbull, in a frank character assessment of Trump this week, sent a megaphone message that Australia must stand up to him.

Turnbull spelled out a shocking truth about Trump. “It appears the more dependent you are on the United States, the closer you are to the United States, the more he feels he can extract value from you […] stand over you, extort you.”

International affairs expert James Curran, professor of modern history at the University of Sydney, was amazed at the strength of Albanese’s “not a friendly act” words. Curran describes it as a “gross overreaction”, given that so many countries will be subject to Trump’s tariffs. He says there are far bigger issues at stake in the relationship.

Curran doesn’t believe the Australian-American relationship will be seriously undermined by the Trump administration – although things will be “rattled and unsettled for a while” – because it is “so thick and deep”. But, he says, “forget the sentiment and talk of mateship, because they don’t count with the president”.

With Trump, “you have to find a middle path, between poking him in the eye and getting down on your knees.”

Not an easy brief, for whomever forms the next government.