Expert Take: What Trump 2.0 Means for Australia
January 15, 2025
The world is closely watching President Trump as he embarks on his second term, following a whirlwind of campaign pledges. For this series, we turned to Basilinna’s network of over 50 experts to share their insights on what this next chapter could mean for their sectors and regions.
Expert Take from Basilinna Executive Director, Peter Fraser
What does the second Trump administration mean for Australia?
The U.S.-Australia relationship has long been built on shared values, with Australia’s longest-serving Prime Minister, Sir Robert Menzies, describing it as “a spiritual one.”
Prime Minister Scott Morrison (L) meeting with U.S. President Donald Trump at the White House in September this year. Source: Flickr
This enduring alignment has driven decades of trade, investment, and strategic cooperation. However, the return of Donald Trump to the White House introduces new complexities for Australia, requiring businesses and policymakers to navigate a more volatile global landscape.
Australia now stands at a pivotal moment in its foreign policy, caught between its closest security ally, the United States, and its largest trading partner, China. The U.S. remains essential to Australia’s defense through the ANZUS (Australia-New Zealand-United States) security treaty and partnerships like AUKUS (Australia-United Kingdom-U.S.). Meanwhile, China buys more than 30 percent of Australian exports, including iron ore, coal, and agricultural products.
A second Trump presidency will amplify the challenges of balancing these relationships, heighten geopolitical tensions, and bring significant trade implications.
Renewed U.S.-China tensions could force Australia into difficult choices between safeguarding economic stability and aligning with U.S. strategic goals.
Australia’s economic reliance on China has driven prosperity but also created vulnerabilities. During the 2020-2021 diplomatic freeze, Beijing imposed trade strikes on key Australian exports, costing billions in lost revenue. While efforts to diversify trade partners are underway, Australian businesses remain exposed to further coercion if tensions escalate.
For companies with operations in the U.S., a second Trump term brings both opportunities and risks. Trump’s focus on deregulation and tax cuts supports business investment, but his unpredictable trade policies—such as imposing tariffs or withdrawing from agreements—could disrupt supply chains and complicate cross-border trade.
The geopolitical landscape in the Indo-Pacific is also evolving rapidly. China’s military spending has surged by 328 percent over the past two decades, driving an unprecedented regional arms race. In response, Australia is boosting its defense capabilities through nuclear-powered submarines and long-range missile systems sourced from Washington.
Ultimately, Australia must carefully balance its economic ties to China with its security commitments to the U.S. As the regional arms race accelerates, the risk of conflict will rise, and Australia’s decisions in the coming years will define its future prosperity and global standing.
Sir Robert Menzies’ vision of a value-driven partnership remains as relevant today as ever.
Source: AAP Image / Mick Tsikas
Businesses and policymakers must approach this period with caution and optimism, leveraging the historical strength of the U.S.-Australia alliance while adapting to the rapidly changing global environment.
The challenge – and opportunity – of the Trump years will be ensuring that this partnership continues to deliver mutual benefits in an increasingly uncertain world.
What trump 2.0 means for the world
Read more from our experts on what Trump 2.0 could mean for their sectors and regions.
Published by Basilinna Institute. All Rights Reserved.
