Lima: Australian business leaders have warned of a severe cost to households from a global retreat on free trade after US President-elect Donald Trump vowed to impose massive tariffs on China and other countries when he takes power.
The warning was echoed by global executives at an Asia-Pacific summit that has been dominated by concerns about a radical shift in economic policy under the next Trump administration, reversing decades of work to remove trade barriers and cut the cost of household goods.
Prime Minister Anthony Albanese greets US President Joe Biden at the APEC summit in Peru.Credit: Alex Ellinghausen
Australian Chamber of Commerce and Industry president Mark Birrell said the moves to impose tariffs, whether from the United States or China, would restrict economic growth and cost jobs.
“It’s not surprising that Donald Trump wants to respond to the Chinese government on trade, but arbitrary tariff barriers and trade restrictions will be costly for everyone,” he said.
The Australian business delegates to the summit – Michaela Browning, Gabrielle Costigan and Tom Harley – also backed the case for open trade as part of the formal message from APEC’s business council to political leaders.
Australia stands to lose up to $36 billion in economic growth under the Trump plan because it would impose a 60 per cent tariff on China and a 20 per cent tariff on other countries, with the aftershocks likely to cut Australian economic growth by 0.8 to 1.5 per cent, said consulting firm KPMG.
Prime Minister Anthony Albanese sent a warning about the Trump plan in his remarks to the opening session of the summit, saying the global economy had doubled in size and incomes had quadrupled after the removal of trade barriers over the past three decades.
“Open, inclusive, rules-based trade remains the best course and surest way to grow our economies and lift the living standards of our citizens,” he said.
US President Joe Biden was due to meet Chinese President Xi Jinping on the sidelines of the APEC summit in Peru, in talks that could defuse tensions between the countries before Trump takes office on January 20.
But there is no agreement, so far, on a statement from all 21 members at the summit in Lima, raising questions about whether they will warn against the imposition of sweeping tariffs under a Trump administration.
Birrell, who is attending the business forum alongside the summit, said he was worried about higher costs for Australian households if Trump acted on his stated plan to increase tariffs and was met with retaliatory tariffs from China and others.
“Escalation of tariff wars between our big trading partners is a real concern, but it’s the normalisation of costly tariffs as a policy instrument that’s most damaging,” he said.
“Unilateral tariffs on our exporters – whether they come from the US or China – harm our GDP and jobs and are unwelcome news for Australian living standards.
“Globally there’s a risk that we are seeing the end of an era of prosperity that has been based on growing trade with the world’s economies.”
The peak business group that advises the region’s leaders, the APEC Business Advisory Council (ABAC), spoke up for free trade in a formal statement representing a consensus from 63 corporate chiefs, comprising three from each of the 21 member economies.
“We want to enable equitable access to economic benefits, support businesses with robust trade foundations, and ensure sustainable and resilient growth,” said council chair Julia Torreblanca, a mining executive and president of the Foreign Trade Society of Peru.
Harley said the Australian business delegates expressed concern about the economic fallout from new tariffs when APEC was formed with the objective of removing barriers and lifting economic growth by slashing trade barriers.
“All three of us have been strong in calling out the risks of rising protectionism across the region to our economies, to consumers and businesses,” said Harley, the founder and director of consulting firm Dragoman, a former BHP executive and former vice-president of the Liberal Party.
“All economies are concerned and want our leaders to stand together to resist rising protectionism. We want our leaders to stand firm to APEC’s founding principles of free and fair trade across the region.”
This was backed by Costigan, the group managing director for business development at defence company BAE Systems and previously a colonel in the Australian Army, and Browning, the chief executive of consulting firm Brunswick Group and a former Australian diplomat and trade negotiator.
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