Extract from ABC News
Analysis
Analysts say that everything the Trump administration is doing now is aimed at isolating China economically. (Reuters: Kevin Lamarque, file photo)
There's been a lot of commentary in the past few weeks about the way Donald Trump and foreign policy have intervened in, or loomed over, the Australian election campaign.
We aren't really used to it, and it shows.
The "debate" veers between a schoolyard discussion about who can be besties with the loudmouth bully, and a slightly uneasy, and not quite addressed noting of the fact that, er, the world trade system and geopolitics are in a state of complete upheaval.
The way our relationships with the United States and China might play out amid this upheaval tends to be seen in bilateral terms.
But there is so much more going on out there while we are consumed (or not) by our federal election than simple bilateral relationships.
Whoever wins on May 3 will face not just a multi-dimensional game of global economic and geo-strategic chess, but possibly an epoch-defining choice for the country.
US President Donald Trump met with Italian Prime Minister Giorgia Meloni in the Oval Office at the White House in Washington, D.C. this week. (Reuters: Evelyn Hockstein)
World's biggest economies locked in battle
This week, the Italian prime minister, Giorgia Meloni, met with President Trump at the White House.
Trump likes the right-wing Meloni.
After several weeks of the president saying things such as the European Union is "pathetic" and accusing the trading bloc of "ripping off" the US, he declared as he met with the Italian that there would "100 per cent" be a trade deal with the European Union.
"They want to make one very much, and we're going to make a trade deal, I fully expect it and it'll be a fair trade deal," he said.
For her part, she said: "the goal for me is to make the West great again — and I think together we can do it".
The meeting might have lacked the jaw-dropping drama of that between Trump and Ukrainian President Volodymyr Zelensky, but it is exceptionally significant.
There is now something of a battle going on between the world's biggest economies for the heart and trade of the EU.
Like the rest of the world, China has been moving to rewire its global trade connections in the wake of the Trump tariffs and has been escalating its trade talks with the European market in recent weeks.
For its part, the EU has shifted its language away from talk about its strategic vulnerability to China to a discussion about mutually beneficial ties.
This is all being done in a world where the possibility of two major trading blocs emerging is now being discussed.
That is, a trading bloc with the United States at its centre, and one with China at its centre.
Nations forced into new alliances
Analysts say that everything the Trump administration is doing now is aimed at isolating China economically.
Of course, there is also a clear link in the administration's mind between imposing tariffs and making the world "pay" for the strategic cost of its defence, particularly Europe.
The EU — which collectively is one of the world's biggest trading blocs — is obviously the biggest prize to gain for either the US or China in creating a powerful trade bloc.
It's hard to conceive of that happening.
But if the EU was to decide, collectively, that the attractions of a zero tariff alignment with the US was irresistible, it would help knock over the dominoes to a world where nations found themselves having to make decisions about whether they were "with" the US on trade or not.
As Financial Times columnist Rana Foroohar wrote recently:
"The U.S doesn't even want to count unequivocally on allies that have significant trade relationships with China, as Europe does (China is the EU's largest import partner, and trade dependency between the two regions has increased in recent years), because the administration doesn't believe it will be able to trust them, given their economic dependence on Beijing."
Hmm, US allies that have significant trade relationships with China…
That would include… Australia!
Xi Jinping blitzes South East Asia amid Trump tariff threats
Who would Australia choose?
Diplomats in Canberra ask these days where Australia would sit if we ended up in a world of two competing trade blocs: with the US or China?
Given our complete economic enmeshment with China, the answer might seem simple but would obviously put us in a bit of a tight spot.
Strategic analyst Hugh White has argued for years that Australia would likely face a choice between its key strategic partner, the United States, and its major trading partner, China.
The debate over this idea has tended to play out in terms of defence and geo-strategic strategy — for example, would we side with the US over a Chinese invasion of Taiwan? — rather than one that begins in the economic realm.
But the complex wheels of the haphazard Trump administration "strategy" on tariffs and rebalancing the world order means that this prospect of two new global trading blocs emerging now underpins the possibility of us having to make an economic choice between the US and China which obviously has strategic consequences.
How this all plays out is only further complicated by some of the ideas racing around Washington, apparently influencing decisions and pronouncements.
Albanese and Dutton are asked if they trust Donald Trump, Xi Jinping
The Mar-a-Lago Accord
It's become known as the "Mar-a-Lago' Accord": an ambition to build up the US manufacturing sector by a combination of tariffs and a much weaker US dollar.
The American dollar's status as a reserve currency has kept it higher than underlying economic numbers might suggest for decades, which makes the US uncompetitive.
Like everything else seen through the Trump prism, this is very unfair.
The chair of Trump's Council of Economic Advisers, Stephen Miran, wrote a paper late last year — A User's Guide to Restructuring the Global Trading System. — which canvassed these issues.
The proposed solution is to force the rest of the world to appreciate their currencies to improve US export competitiveness, and also converting their significant US debt into 100 year bonds.
Just why everyone would agree to do this isn't clear, unless of course you are threatening them with tariffs or the removal of the US security blanket.
It does all rely on China, blinking in the face of US tariff threats, and deciding to cooperate on the debt market rather than doing what is available to it and selling some of its copious levels of US debt, pushing its price down and interest rates up.
The economics of the ideas involved are also so out there that they leave most analysts simply perplexed about why anyone would think it could work without global cooperation. This is particularly so at a time when Trump is blowing any such cooperation up, and leaving the rest of the world with no reason to trust that he would continue on any particular policy course, let alone one which is so unconventional and high in risk to the self-interest of any other country.
Whoever wins the election will face a huge decision for Australia's geopolitical future. (ABC News: Matt Roberts)
A whole new world
The world that the next Australian government will find itself dealing with will be a very different one to the one the last government left when the election was called on March 28.
A special pre-election Lowy Institute Poll released this week reported a new 20-year low in the level of trust expressed by Australians towards the United States, with just 36 per cent of Australians expressing any level of trust in the US to act responsibly.
Eighty per cent of Australians disapproved of Donald Trump's use of tariffs to pressure other countries to comply with his administration's objectives.
However, the vast majority of Australians — 80 per cent — continued to say the US alliance is "very" or "fairly" important for Australia's security, steady on last year.
Leading us through the complexities of Trump world could be just as difficult as leading the Australian public through their now confused and conflicted views about our relationship with the United States.
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