{"id":421713,"date":"2026-01-20T16:11:08","date_gmt":"2026-01-20T16:11:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/421713\/"},"modified":"2026-01-20T16:11:08","modified_gmt":"2026-01-20T16:11:08","slug":"donald-trump-trashed-global-economic-orthodoxy-a-year-on-did-he-leave-australia-a-winner-or-loser-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/421713\/","title":{"rendered":"Donald Trump trashed global economic orthodoxy. A year on, did he leave Australia a winner or loser? | Australian economy"},"content":{"rendered":"

One year into Donald Trump<\/a>\u2019s presidency and experts in Australia and around the world can hear the grinding of history\u2019s gears.<\/p>\n

\u201cWe have entered a new economic era; one with rules that are very different to the past,\u201d the Commonwealth Bank\u2019s chief economist, Luke Yeaman, wrote in October<\/a>.<\/p>\n

We exit the heyday of globalisation and its relentless, single-minded pursuit of efficiency, to \u2026 what?<\/p>\n

At this point it looks like a world of rising trade protectionism, populism, self-sufficiency, suspicion, conflict and crackdowns on the movement of people and capital.<\/p>\n

Sign up: AU Breaking News email<\/a><\/p>\n

Trump has exploded so many established norms that his return to the White House seems to have ruled a line between what was before, and what is now and will be.<\/p>\n

The \u201cliberation day\u201d tariffs in April last year triggered fears of a global trade war that would smash the world economy.<\/p>\n

Graph of US effective tariffs since 1900<\/a><\/p>\n

As US import taxes returned to levels not seen in a century, the Reserve Bank board in May was so worried about the fallout that it considered the case for a supersized double rate cut.<\/p>\n

\u201cIt\u2019s been a complete rollercoaster,\u201d the RBA governor, Michele Bullock, lamented at the time.<\/p>\n

Experts predicted the collateral damage<\/a> to the Australian economy from rising protectionism could reach $27bn, or 1% of GDP.<\/p>\n

Nearly 60% of economists surveyed by the Economic Society of Australia expected the Trump presidency to hurt Australian economic growth, versus 8% \u2013 just three of the 39 experts \u2013 who reckoned the opposite.<\/p>\n

Australia an unlikely winner<\/p>\n

So much for the rhetoric, what about the reality? A fair summary would be: so far, so good.<\/p>\n

The global economy has not fallen into a hole. Countries have adjusted to American trade aggression and exporters have found other markets or workarounds, at least temporarily.<\/p>\n

Yeaman, a former Treasury deputy secretary before his role at the CBA, says he had not been expecting the worst.<\/p>\n

Still, he says, \u201cit is a bit of a puzzle: why hasn\u2019t the world been hit harder by tariffs?\u201d<\/p>\n

In theory, a medium-sized and open economy like Australia\u2019s stands to be a particular loser in this new era of harder borders and falling world trade.<\/p>\n

So far \u2013 always that caveat \u2013 the opposite has been true.<\/p>\n

\u201cCertainly Australia is one of the winners,\u201d says Yeaman, who in a research note earlier this year warned his banks\u2019 clients of that \u201cnew economic order\u201d.<\/p>\n

Counterintuitively, in a world of higher American tariffs our goods exports to the United States have doubled.<\/p>\n

Thanks to an explosion in beef sales and especially gold exports, international sales to the US have gone from $16.8bn in the first 10 months of 2024 to $33.2bn in the equivalent period of 2025.<\/p>\n

The \u201cbaseline\u201d minimum 10% American tariff applied to Australian imports is bad. But it\u2019s less bad than some of the extraordinary taxes that have been imposed on many other countries, something the Albanese government has been keen to point out.<\/p>\n

That has in some cases made our goods more competitive, and in the case of beef has helped drive a boom in sales, helped by American beef producers struggling with drought.<\/p>\n

In the calendar year to October, Australian beef sales to the US jumped from less than $3bn in 2024 to $4.2bn in 2025, according to figures from the Department of Foreign Affairs and Trade.<\/p>\n

Fears associated with Trump\u2019s policies have helped turbocharge the price of gold. Photograph: Bloomberg\/Getty Images<\/p>\n

Climbing food prices forced Trump to announce the removal of tariffs<\/a> on beef and other agricultural products in November.<\/p>\n

But the truly remarkable climb has been in gold exports, which surged from $1.2bn in 2024 to $14.6bn.<\/p>\n

Fears associated with Trump\u2019s policies have helped turbocharge the precious metal\u2019s price<\/a>, which jumped nearly 70% last year and hit record highs.<\/p>\n

The saving graces<\/p>\n

The ANZ\u2019s chief economist, Richard Yetsenga, says Australia\u2019s experience of unexpected resilience is part of a global story.<\/p>\n

\u201cPerhaps the most fundamental analytical failure this year was not recognising that much of the impact of the US tariffs was to redistribute trade and production, rather than to destroy demand.\u201d<\/p>\n

Experts point to a number of reasons why the world looks in reasonably good shape one year into Trump\u2019s second term.<\/p>\n

\u201cThink back to April, when the catastrophising was occurring, and there was a lot of talk about reprisal,\u201d Yeaman says.<\/p>\n

Europe and Japan started out talking tough but ultimately countries unfairly hit by high tariffs have not retaliated and so avoided the worst-case \u201cglobal trade war\u201d scenarios.<\/p>\n

\u201cCountries have worked with the US where they can and, where they can\u2019t, they\u2019ve taken the hit and moved on.\u201d<\/p>\n

Warwick McKibbin, an ANU economics professor and one of the country\u2019s leading macroeconomic modellers, was never convinced by catastrophic forecasts in early 2025.<\/p>\n

Still, McKibbin has been surprised how well things have gone, which he puts down to two main factors.<\/p>\n

\u201cThe tariff war was not as bad as people thought \u2013 it was all show and no substance,\u201d he says.<\/p>\n

The other, McKibbin says, has been the boom in investment associated with artificial intelligence, especially in the US where it has delivered a massive boost to the economy and the share market.<\/p>\n

\u201cStrip out that investment and most of the US appears to be in recession,\u201d he says.<\/p>\n

McKibbin warns that the most immediate danger to the American economy is not from tariffs.<\/p>\n

\u201cThe AI boom is a bubble and pretty close to bursting,\u201d he says.<\/p>\n

Not a bang, but a whimper<\/p>\n

The worst-case scenarios that were war-gamed early in 2025 may not have come about but the outlook remains dimmer than it would have been without Trump\u2019s unpredictable \u201cAmerica-first\u201d policies.<\/p>\n

The International Monetary Fund\u2019s latest update to its world economic outlook highlighted the \u201cnotable resilience despite significant US-led trade disruptions and heightened uncertainty\u201d.<\/p>\n

Like McKibbin, the IMF officials were more concerned with an AI-led sharemarket bust than Trump\u2019s erratic policymaking.<\/p>\n

But the US\u2019s renewed determination to seize control of Greenland, the brief invasion of Venezuela, and the unprecedented criminal investigation into the chairman of the US Federal Reserve highlight how the American president continues to push the boundaries.<\/p>\n

Early last year the RBA\u2019s deputy governor, Andrew Hauser, compared the impact of tariffs<\/a> to the damage to the British economy from its 2016 decision to leave the European Union.<\/p>\n

Hauser, also a former senior Bank of England official, said: \u201cThe day after Brexit happened, everyone thought the world would end, and it didn\u2019t. But 10 years on, you\u2019re seeing the profound effects of some of those changes for sustainable growth rates and for fundamental things in the economy.\u201d<\/p>\n

McKibbin agrees. He describes the impact as the difference between breaking a leg and getting cancer.<\/p>\n

\u201cThe global system as we know it is being undermined and all the institutions are being undermined, and the security and other arrangements have all been changed.<\/p>\n

\u201cAll this is undermining the health of the global economy. There are a lot of risks out there.\u201d<\/p>\n

Jenny Gordon, a former chief economist at the Department of Foreign Affairs and Trade, says the world has weathered Trump\u2019s reckless policymaking \u201cfairly well so far\u201d.<\/p>\n

The treasurer, Jim Chalmers. The year ended with a pickup in growth and a much less welcome rise in inflation. Photograph: Mick Tsikas\/AAP<\/p>\n

\u201cBut 2026 could be very, very interesting. It might be the people around Trump say \u2018hold on a sec, let\u2019s pull back and think about rule of law\u2019 but I\u2019m not holding my breath,\u201d Gordon says.<\/p>\n

Whether China chooses to rein in its massive export surpluses will also play a part in determining the prospects for the global economy in this year and beyond, she says.<\/p>\n

The road ahead<\/p>\n

In Australia, the year ended with a welcome pickup in growth and a much less welcome rise in inflation.<\/p>\n

The economy was projected to expand by 2.3% last year and 2.2% in 2026, according to CBA estimates, a major improvement from 1.3% in 2024.<\/p>\n

Higher interest rates loom, with a RBA rate rise or two on the cards this year, the first maybe coming as early as February.<\/p>\n

But unemployment is not projected to jump and the fears that haunted economists have not carried over into the new year.<\/p>\n

Yeaman says \u201cfor 2026 we see a bit more of a positive outlook, led by the US\u201d.<\/p>\n

Another round of US tax cuts<\/a> may ultimately be unaffordable for a country mired in massive structural budget deficits but should buoy activity in the short term.<\/p>\n

\u201cBut we are in a more volatile world and there are very substantial risks that could derail that,\u201d Yeaman says.<\/p>\n

He lists tensions in the South China Sea, the risk of an AI bust, or at least correction, and whether Trump is successful in installing a lackey at the head of the US Federal Reserve.<\/p>\n

Bullock\u2019s metaphor of a rollercoaster looks about right.<\/p>\n

There will be many more highs and lows before this all plays out.<\/p>\n","protected":false},"excerpt":{"rendered":"One year into Donald Trump\u2019s presidency and experts in Australia and around the world can hear the grinding…\n","protected":false},"author":2,"featured_media":421714,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":{"0":"post-421713","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/421713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=421713"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/421713\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/421714"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=421713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=421713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=421713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}