It is easy to be direct with an adversary — far less so with an ally. Australia’s new government faces a greater strategic challenge from Washington than from Beijing. US foreign policy has become increasingly unpredictable, just as China is growing more forceful.
Voters have returned Australian Prime Minister Anthony Albanese with a strong mandate, reaching for continuity rather than change. The nation faces a precarious global security picture and US President Donald Trump’s trade war is taking a toll on the economy. The IMF has downgraded projected GDP growth for this year to 1.6 percent from 2.1 percent, citing US tariffs.
Australia and the US are two of the closest allies, having fought side by side in every major conflict since World War I. In recent years and through successive governments, they have tightened their partnership in the face of an ever-larger military footprint China is laying down across the region, but public perception has shifted dramatically, with 64 percent of Australians saying in a recent poll that they do not have “very much” trust (32 percent) or no trust “at all” (32 percent) in Washington’s ability to act responsibly in the world.
The “Trump Effect” is also thought to be one of the reasons the conservative opposition was crushed in last weekend’s election. Leader Peter Dutton, who initially championed Trump’s tactics, lost his own parliamentary seat.
It is an unusual paradox for Australia, said Richard McGregor, senior fellow for East Asia at the Lowy Institute, a Sydney-based think tank.
“The big wild card is not China, it’s the US,” McGregor said. “We know what Beijing wants. It’s pushing out its regional footprint and territorial ambitions. It’s the US that’s the variable in this equation.”
The military and political importance of the US is simply too important to fade, particularly as Canberra tries to manage Beijing’s outward push in the region. The Australian government in 2021 announced a deal with Washington and London, known as AUKUS, to equip Australia with nuclear-powered submarines over the coming decades. US Secretary of Defense Pete Hegseth in February reiterated support for the pact.
Trump and Albanese spoke after the election in a call the Australian leader described as “warm and positive,” but Trump’s vision of global trade is ruffling feathers. The latest is Washington’s plan to impose 100 percent tariffs on foreign-made movies, which could affect films made in Australia, a popular location for Hollywood productions in recent years due to lower costs. Australia has vowed to defend the local industry.
In the words of former Australian prime minister Malcolm Turnbull, Trump’s chaos is a “gift to China.” The instability has helped to feed into Beijing’s narrative that it is the better upholder of the rules-based order. Where the US leader has been mercurial, Beijing is being predictable — even if at times belligerent.
The Australian government has spent the past few years building bridges with Beijing, the nation’s biggest trading partner. China in 2020 imposed trade restrictions on everything from barley, wine, beef, coal, cotton to lobster, only lifting them recently. Despite the reset in economic ties, public opinion is arguably even more negative toward the world’s second-largest economy than Trump. Only 17 percent of Australians trust China to act responsibly, according to a Lowy Institute poll last year, and most remain deeply skeptical of its intentions. Recent live-fire military drills off the Australian coast have soured sentiment further.
For decades, Australia has been able to rely on the US as its security ally and China as its economic partner. That comfortable position might be coming to an end. Instead, Canberra might find that its future lies with building bonds with other nations that share strategic concerns over China’s assertiveness and Trump’s capriciousness to help push back against the destabilizing aspects of both.
Data in 2022 and 2023 showed that 81 percent of Australia’s goods and service exports went to Asia. Yes, a big part of that is China, but building even better ties with Japan, South Korea, India and ASEAN could help to diversify business and security interests. Canberra could increase collaboration in areas such as technology, defense and economic development, using existing frameworks with Southeast Asia and India as a springboard.
It is clear that Australia’s economic future lies firmly in the region. The question now is not whether to engage, but how deeply the Australian government can do so while deftly navigating its relationships with the two superpowers.
Karishma Vaswani is a Bloomberg Opinion columnist covering Asia politics with a special focus on China. Previously, she was the BBC’s lead Asia presenter and worked for the BBC across Asia and South Asia for two decades. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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