Angus Livingston and Daniel McCulloch
(Australian Associated Press)
A global trade war between the United States and China will hurt Australian consumers caught in the crossfire, the federal trade minister warns.
Donald Trump has slapped tariffs on $278 billion worth of Chinese goods, sparking the latest round of a battle that threatens the global economy.
“We urge all parties to step back from further escalating tariffs and to tackle trade-distorting subsidies or other issues,” Trade Minister Simon Birmingham said on Tuesday.
“Australia’s strong and growing economy – some 27 consecutive years of economic growth – is an example to the world of looking outwards.”
The US president has announced a new round of tariffs against China to take effect from Monday, starting at 10 per cent, and rising to 25 per cent at the beginning of next year.
He threatened to drive the trade stake even deeper if Beijing retaliates.
Accounting giant KPMG estimates the escalation in the US-China trade war could cost the Australian economy at least $36 billion over the next decade, depriving the national economy of 0.3 per cent growth.
The global firm predicts Australia will be far more heavily bruised than the European Union or Japan.
“As a small, open economy anything that negatively influences our trading with other countries is a bad outcome for Australia,” KPMG Australia chief economist Brendan Rynne told AAP.
“The real concern remains that this trade war develops into something that brings in other countries who adopt protectionist trade measures to ward off the excess goods that get built up in China and the US.”
Senator Birmingham said Australia would continue to pursue trade deals, like ones currently being negotiated with the European Union and Indonesia, to keep the economy growing.
“We continue to have the backs of Australian industry. We’ll work hard to ensure they aren’t caught in the crossfire,” Senator Birmingham said.
Australia has signed free trade deals with China, Japan, South Korea, and Malaysia since 2013, while the Trans-Pacific Partnership and a deal with Peru are yet to be ratified.
Labor frontbencher Brendan O’Connor fears Australia suffer collateral damage in the global trade war.
“There will be ramifications – the extent and nature of which we don’t know yet – but there’ll be some impact on Australia,” Mr O’Connor told Sky News.
“The retaliation is going to ripple through this region, without a shadow of a doubt.”