‘Dark shadow’: Trump trade war injects more | Australian Markets

Donald Trump’s trade war has not instantly hit the Australia federal finances, regardless of the worldwide tariff dogfight up-ending financial markets and casting a “dark shadow” throughout share markets.

Almost two weeks on from the federal finances, federal Treasury on Monday launched Australia’s pre-election financial and financial outlook for 2025.

Since Treasurer Jim Chalmers offered the finances on March 25, and Anthony Albanese kicked off the election marketing campaign 4 days later, international financial markets have been rocked.

The US President’s international baseline 10 per cent tariffs – far larger for a lot of of Australia’s key trading companions – have sparked recession fears and created a likelihood the Reserve Bank slashes rates of interest by 50 foundation factors subsequent month.

“There’s even a more than even money expectation in the markets, more than 50 per cent expectation in the markets, that the next Reserve Bank interest rate cut in May might be as big as 50 basis points,” Mr Chalmers mentioned.

On Tuesday, Mr Chalmers mentioned the tariffs had forged a “dark shadow” over the worldwide economic system.

“What our modelling shows is that we expect there to be big hits to American growth and Chinese growth and a spike in American inflation as well,” Mr Chalmers mentioned.

The forecast exhibits nominal GDP is anticipated to grow by 4.25 per cent in 2024-25, after which gradual to three.25 per cent in 2025-26, offset by a moderation in home inflation and “sharp fall in the terms of trade”, the outlook states.However, that evaluation was ready with info available up till March 31, so doesn’t embrace the complete element of the Trump’s tariffs launched on April 3 Australian time.

On Monday, the Treasurer conceded the Australian economic system would undergo a setback.

“We expect more manageable impacts on the Australian economy, but we still do expect Australian GDP to take a hit,” he mentioned.

“These escalating trade tensions are casting a dark shadow over the global economy.”

How all international locations reply to the Trump tariffs was the important thing unanswered query, Mr Chalmers mentioned.

“We take seriously the warnings from economists around the world about the risk of a global recession,” he advised reporters.

“This is one of the many reasons that we describe the tariff decision to be ill-considered and unwarranted.

“The damage being done by the tariffs is now very clear for all to see.”

Following bloodbaths on US sharemarkets to finish final week, the ASX fell 3.8 per cent within the first few hours of trading Monday.

As it stands, the Australian Treasury forecast our economic system will grow at an growing price, however that “there’s much more substantial risks to that more substantial risks to that outlook”, the Treasurer says.

“The risks are obvious and substantial.”

Dr Chalmers spoke with the British Exchequer (treasurer) Rachel Reeves on Sunday evening, Australian time.

“In uncertain times, the Australian economy is well placed because of the progress that Australians have made together these past three years,” he mentioned.

“We are not uniquely impacted by these tariffs. But we are uniquely placed and we are well-prepared as well.”

Only about 4 per cent of Australian exports go to the US.

“The global risks are real but we’re in good shape in Australia. We’re in good stead because of the progress we’ve made in the budget.”

The Treasurer pointed to falling inflation and cost-of-living helps as padding for the Australian economic system amid the worldwide shockwaves.

Mr Chalmers mentioned his authorities had additionally rebuilt wages and diversified Australia’s export markets.

Being election time, Mr Chalmers described Peter Dutton and the Coalition’s financial plans as a “bin fire”.

“Peter Dutton’s Coalition is an absolute bin fire of cuts and chaos,” he mentioned.

“This would be the worst time to risk a change of government, to a Coalition government that would make wages lower, taxes higher and who has secret cuts to pay for nuclear reactors.

“Peter Dutton represents an unacceptable risk to our economy and to household budgets.”

In Tuesday’s financial outlook, Treasury flags the uncertainty offered by the worldwide financial ruptures.

“This escalation in trade hostilities has created significant economic uncertainty and exacerbates the risks to the economic and fiscal outlook,” Treasury says within the replace.

“The economic parameters used to prepare the 2025 PEFO (economic outlook) are unchanged from those presented at the 2025–26 budget,” it says within the outlook paperwork.

“The increase in tariffs announced over the past few days have been more significant than expected.

“The potential magnitude and persistence of the economic effects of these announcements has resulted in greater than usual uncertainty around the outlook.”