What does Trump 2.0 mean for Australia? We asked 40 economists

The deflationary camp

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AMP chief economist Shane Oliver agreed with Huangfu that a global trade war could reduce demand for Australian exports. But he suggested this could lower inflation locally.

Kyle Rodda of Capital.com shared this view, saying Trump’s tariffs were likely to be deflationary. He said: “The greater risk is to future growth, which could weaken due to the impact of tariffs on the already vulnerable Chinese economy.”

Sean Langcake of Oxford Economics believed Trump’s second term would bring greater uncertainty but with minimal effects on Australia. “Tariffs will raise inflation in the economies that impose them but we don’t think this will include Australia,” he said.

The inflationary camp

Mala Raghavan of the University of Tasmania, while saying it was difficult to predict the global economic outlook, said: “Global supply chains will experience substantial disruptions, considerably affecting the global value chain. All these could lead to inflationary pressure.”

Nicholas Frappell of ABC Refinery said Australia was unlikely to be directly targeted by Trump’s tariffs. But he said: “If significant tariffs are placed on China, Australia’s largest trading partner, Australia could be hurt by an overall slowdown in trade and possibly import inflation via a weaker AUD/USD.”

Property expert Michael Yardney echoed these thoughts: many Australian goods, especially since commodities such as oil and gas are priced in US dollars.

A stronger US dollar, he said, could make imports more expensive, increasing inflationary pressures.

Politics

Agreeing that a trade war could heighten global volatility, Oliver said Elon Musk and Vivek Ramaswamy’s Department of Government Efficiency would be likely to create pressure in Australia to cut taxes and reverse the trend towards bigger government.

However, Trump may not deliver on all his promises. In 2016, Salena Zito of The Atlantic said Trump should be taken “seriously, but not literally”, a sentiment echoed by many commentators since.

Nicholas Gruen of Lateral Economics said Trump might not adhere to his campaign playbook. “If he does, the impact will be substantial but not monumental,” he said. “However, I expect he’ll trim his sails as advice arrives on how harmful going all the way could be.”

The bigger picture: positive, negative, or neutral?

Economists remain divided on whether a second Trump term would benefit or harm Australia. While 40 per cent believed the impact would be negative due to trade disruptions and inflationary risks, 23 per cent considered it neutral, citing limited direct trade ties with the US.

Meanwhile, 17 per cent identified potential benefits, such as increased commodity exports; and 20 per cent remained uncertain.

Although most economists cited uncertainty and volatility, Tim Reardon of the Housing Industry Association highlighted potential upsides, saying US-China trade tensions could create new export opportunities for Australia, particularly in agriculture.

A second Trump presidency could bring turbulence to the global economic order and Australia is likely to face challenges and opportunities. While direct trade ties with the US are limited, broader implications of Trump’s policies, particularly regarding China, could weigh heavily on key sectors such as commodities and exports.

The diversity of expert opinions highlights the uncertainty surrounding Trump’s impact on the Australian economy. As Craig Emerson said: “Who knows? Donald Trump doesn’t know, and he won’t care.”

While it remains unclear how much of his rhetoric is mere bluster, Australia could find itself relying on its reputation as the lucky country. After all, as Trump once said, “everything in life is luck.”

Graham Cooke is the head of consumer research at Finder.

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