"Economically, it may not help the US blue collar industrial swing states or Trump," says the UNSW Business School's Tim Harcourt. "It is said that putting up tariffs is like putting rocks in your own harbour and ultimately will hurt your own country's consumers, producers and workers. However, Australia could benefit in the long run."
The White House has ruled out granting Australia an exemption from its new aluminum and steel tariffs, saying that any exceptions for allies are unlikely but also leaving room the president to change his mind.
"We've been here before – trade protection was the rationale behind the Hawke-Keating tariff reforms of 1983-96, that took Australia from a protected economy with high inflation and high unemployment, to an economy that has experienced over 25 years of continued economic growth and a much lower unemployment rate that the Hawke Keating government inherited and bequeathed."
"World leaders now fear a trade war, right when there were good signs of better days ahead in the global economy," says Tim Harcourt, the J.W. Nevile Fellow in Economics at the UNSW Business School.
The EU has threatened retaliatory tariffs on US manufactured goods, in a tit for tat will harm American businesses that export while raising costs for businesses that rely on a global supply chain.
However, the indirect effects could bring about unintended consequences, and Harcourt suggests if the US is isolated it could be good for Australian trade.
"If Trump makes the US an erratic and chaotic trade partner, Australia will be seen by China, South Korea, India and ASEAN as safe, reliable and on side in the Asia Pacific, particularly given the withdrawal of the USA by the Trump administration of the Trans Pacific Partnership (TPP). And given that the US is mainly a source of foreign investment, it is trade that matters for us in North East Asia and that's where Australia must maintain its solid reputation as a reliable supplier and customer.
He suggests in the end it may make the US lose the war in terms of trade. "Ultimately, we are all losers in a global trade war and that will only hurt the most vulnerable in all societies."
Tim Harcourt was previously chief economist at Austrade. As a trade specialist at UNSW he has studied the international trade landscape for many years, and can comment on all parts of the TPP.
For further comment call Tim Harcourt on 02 9385 3816, 0408 485 479, or Email firstname.lastname@example.org.
Media contact: Julian Lorkin: 02 9385 9887