Treasurer Jim Chalmers warns against tit-for-tat | Australian Markets

Treasury modelling has revealed the whole influence of the US tariffs on Australian metal and tariff imports will trigger simply a 0.1 per cent hit to Australia’s GDP, whereas a tit-for-tat trade struggle would have far deeper ramifications for Australia’s financial system.

Jim Chalmers is set to element the figures in a pre-budget speech to the Queensland Media Membership in Brisbane on Tuesday, which can spotlight the worldwide points affecting Australia.

“This is a time of serious volatility in a global economy which is increasingly uncertain and unpredictable,” the Treasurer is anticipated to say on Tuesday.

“A new US administration disrupting trade, a slowdown in China, a war in eastern Europe and a fragile ceasefire in the Middle East, political division and dissatisfaction around the world.”

Whereas the “direct overall impacts” of the Trump administration’s sweeping 25 per cent tariffs on metal and aluminium “should be manageable,” Mr Chalmers will warn towards the influence of a trade struggle.

“Treasury estimates the direct hit to GDP from steel and aluminium tariffs would be less than 0.02 per cent by 2030,” he’ll say.

“But when you add in the indirect effects, the hit to GDP could be more like 0.1 per cent by 2030.

“In fact, over a range of scenarios, Treasury found the indirect GDP impacts of a trade war could be up to four times larger than the direct effects of tariffs on our economy.”

He’ll use these figures to back the federal government’s place of preventing “for more resilience, not more retaliation,” with senior Labor ministers dudding the prospect of retaliatory tariffs, which might solely penalise Australian importers.

“In a world of retaliation and escalation, the impacts of tariffs are amplified, they linger for longer, resulting in a bigger reduction in GDP and a bigger increase in prices,” he’ll say.

“Our response to this will not be a race to the bottom on tariffs.

“Because more and higher tariffs would harm, not help, our workers, businesses, industries and economy.”

Commerce Minister Don Farrell can also be anticipated to talk to US trade ambassador Jamieson Greer on Tuesday, with the senior minister promising to make Donald Trump “an offer he can’t refuse”.

Regardless of doubt from Mr Trump, Labor will proceed its makes an attempt to secure a tariff exemption for Australia.

As beforehand revealed, Mr Chalmers may also use the speech to warn of the instantly $1.2bn dent as a consequence of restoration efforts from ex-Tropical Cyclone Albert, threatening 0.25 per cent of quarterly growth.

On Monday, he additionally conceded the flow-on results would possible have an effect on grocery costs, in addition to building and construction prices.

“We do expect there to be some sort of pressure on prices in both of those areas,” he stated.

“I would say not just of the people in my own community, but also to Australians right around the country.”

Figures from December’s Mid-Yr Financial Fiscal Outlook revealed the finances deficit over forwards estimates would increase by $21.8bn to $143.9bn by 2027-28, with the forecasted deficit for 2024-25 to take a seat at $26.9bn.