Australia said on Sunday that Donald Trump’s return to the White House is now threatening to wreck the global economy. Jim Chalmers, the country’s treasurer, warned from Canberra that the United States is about to light a fuse under world markets with new tariffs and trade chaos, just days before he delivers his fourth national budget on March 25. “This is a whole new world of uncertainty that we’re dealing with here. The changes out of the US are not surprising, but they are seismic,” Jim said in a Sunday interview with Bloomberg. He said the global economic fallout from Trump’s new trade war has already cast a shadow over this budget, which comes less than two months before Australia’s federal election, due by May 17. Jim confirmed that the budget will include a $1.8 billion in new electricity bill subsidies, lasting six months. That translates to $1.1 billion USD, and it will drag the budget bottom line down. But the money is meant to help with what Jim called a continuing cost-of-living crisis. He said the pressure on Australian families isn’t just coming from home—it’s coming straight out of Washington. Chalmers links Trump’s new tariffs to global instability On Tuesday, Jim said he expects only a small boost to government revenue in this budget. “What you’ll likely see in the budget is that Treasury expects any upgrade next week to be about a sixth of the average of our budget updates. The smallest revenue upgrade of the four budgets, by far,” he said during a press conference in Canberra. He made clear that the chaos isn’t just financial. It’s political too. “We’ve got conflicts in the Middle East and Europe. We’ve got political uncertainty and division around the world,” Jim said. “The budget is designed not just to respond to all of that uncertainty, but to make ourselves more resilient in the face of those external shocks.” Jim said the current international environment is worse than anything he’s seen in years. And that includes what Trump is doing with tariffs. Trump said on Sunday aboard Air Force One that he’ll impose reciprocal tariffs and additional tariffs on specific sectors starting April 2. “They charge us and we charge them and then in addition to that on autos on steel on aluminum we are going to have additional tariffs,” Trump said. Jim responded Tuesday by saying those tariffs are a serious threat to everyone. “These sorts of tariffs are self-defeating, they’ve self-sabotaging, they’re a recipe for less growth and higher inflation, not just in the US but around the world,” he told ABC. He added, “We’re not uniquely disadvantaged by the sorts of tariffs coming out of DC, but we deserve better as a long-term partner and ally.” Australia has been trying to get an exemption from the U.S. tariffs, especially on steel and aluminum, but Jim confirmed the effort failed. Trump had earlier said he would consider it, but that never turned into anything. Now, Jim said Canberra is focused on what happens in April. The government is worried that the next wave of tariffs will hit Australian exports, including beef and pharmaceuticals. Canberra prepares for economic fallout from U.S. trade war In a pre-budget speech, Jim said that the impact of last week’s tariffs on Australian growth would be minor—less than 0.02% by 2030. But he warned that number could rise fast if Trump keeps going. Jim said the Trump administration’s moves are already hurting trade stability, and could cause long-term damage to economies that rely on open trade, including Australia. Jim also addressed interest rates and wages. He said that the Reserve Bank of Australia had finally cut rates for the first time in four years, back in February. That’s a change from last year, when rate hikes were used to fight inflation. Now, Jim said, there are signs of recovery. “We’ve got inflation down, real wages are up and incomes are strengthening. Unemployment is very low by historical standards. We’ve got the debt down, interest rates have started to come down and now growth is rebounding solidly in our economy as well, led by the private sector,” he said Sunday. Even with that domestic progress, Jim said the outside risks—especially from the U.S.—are too big to ignore. Trump already hit China with a 20% tariff, and he imposed a 25% levy on steel and aluminum across the board. He also added 25% tariffs on Canada and Mexico, although he gave those countries a one-month extension if their goods follow the USMCA trade agreement from his first term. Trump said Canadian energy and potash, a major fertilizer input, would only get a 10% tax. But there’s no carve-out for Australia, and Jim said the country now has to prepare for fallout on key industries, especially exports that depend on U.S. markets. Jim said that even though Australia’s green energy and pro-industry policies are similar to what Joe Biden supported in his presidency, there won’t be any new announcements in that area in the budget. He said the focus is now on keeping the economy stable, not rolling out more programs. He also confirmed that the Labor government will make this election about one thing—economic resilience. That’s because Prime Minister Anthony Albanese has been under pressure for months. Polls show the Labor party is basically tied with the opposition, and the campaign is expected to launch soon. Albanese has taken heat for not solving the housing mess, and voters are still angry about rising grocery costs and rent hikes. With an election deadline coming up by May 17, Jim said the government wants to use the budget to show it’s responding to global risks. “The vote will focus on making the national economy more resilient at a time of very serious global economic uncertainty,” Jim said Tuesday. Jim said Trump’s new tariff regime, set to start in April, is adding major pressure to an already fragile global system. The tariffs are based on what Trump calls reciprocal rates—if a country has high tariffs on U.S. goods, he’ll return the favor. On top of that, Trump wants extra tariffs on cars, steel, aluminum, microchips, and pharma. Trump told reporters on Sunday that he’s going after “foreign goods imported to the U.S.” in two ways—first through the reciprocal system, and then with sector-specific hits. “April 2 is a liberating day for our country,” Trump said on Air Force One. “We’re getting back some of the wealth that very, very foolish presidents gave away because they had no clue what they were doing.” Jim said Australia isn’t taking chances. He confirmed the budget will respond to these new trade threats with policies designed to shield the economy. But he also said the international situation is changing so fast that no budget can fully absorb the damage if Trump’s tariffs expand. Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
