The geopolitical shock of Trump’s second presidency has gripped Australia – but it was a long time coming. China’s rise has upended our strategic environment. The war in Ukraine showed the contours of a world in which might is right. Trump 2.0 has marked the arrival of the new world order that Australians feared most – one dictated by major-power realpolitik and economic fragmentation. China’s assertiveness and Russia’s aggression were manageable if you were in the powerful camp led by the United States – Australia’s chief security guarantor. But the “fear of abandonment,” so eloquently described by the late Allan Gyngell, by a transactional and nationalist America is now a sobering reality. This is the end of the U.S.-led system as we know it. What comes next is fluidity and chaos, before the world settles on some new equilibrium of power, most likely less favorable to Australia.
For Australia, this means an uncomfortable shift to independence and self-reliance – in economics, defense, and diplomacy. The change will be long, costly, and painful. But we must start now.
For Australia – a trading nation reliant on global rules and norms – self-sufficiency does not equal protectionism and isolation. The sources of Australia’s wealth and safety are still in free trade, open markets, and alliances with like-minded states.
The key to Australia’s self-reliance is in our region. Canberra now must double down on security, economic, and societal ties with Asia, and invest in its Asia expertise. Equally stunned by the new America, Asia remains the world’s economic powerhouse. Australia’s trade and supply chains are deeply integrated into the region, and Asia is the main source of its population growth. Given Trump’s disdain for alliances, Australia’s security will be even more dependent on a new equilibrium of power in Asia, or it may be forced to confront and negotiate a creeping Chinese hegemony in the region.
For generations, Australian politicians have debated whether Australia should view itself as an integral albeit distinct part of Asia. This debate has largely been settled. It’s time to get on with expanding and deepening economic and strategic partnerships in the region. In the process, Australians ought to learn to be more hard-headed and geopolitically nimble as the emerging global order will be unsentimentally driven by interests and trade-offs more so than by loyalties and values.
Successive Australian governments have recognized the necessity of this shift. However, their policy response has been an even deeper enmeshment in the U.S. defense and alliance network while joining U.S.-led coalitions of like-minded states to balance Chinese power. The sustainability of this policy will now be severely tested. Even if the U.S.’ commitment to the ANZUS alliance endures, Australia will be asked to be more self-reliant in defending itself. It means bringing its defense budget to above 3 percent of its GDP. Simultaneously, with Washington disinterested in regional leadership, Australia will need to step up in building and sustaining its own defense partnerships with India, Japan, Southeast Asia, and the Pacific. In the wake of Trump’s ambush, Australia must review, although not abandon, its Indo-Pacific strategy to balance Chinese power through partnerships with a like-minded coalition of states. However, this should be supplemented by a credible and capable Australian defense force and deterrence strategy.
Building this will require a strong economy, whose sources of growth are overwhelmingly in Asia. Australia has already started a long and painful journey of trade expansion and diversification, forced by the recent diplomatic and trade fallout with China. Shaken by Trump’s tariffs, all of Australia’s neighbors in Asia will now be looking beyond the U.S. for economic opportunities and complementarities. The premium for Australian policy and economic stability has just gone up. This is a unique opportunity for Canberra to upgrade its regional economic engagement.
The Government’s South-East Asia and India Economic Strategies have already injected much needed energy into Australian business engagement with the region. So far, the results have been modest and mixed. Rewiring the risk-averse Australian business mentality is hard, but this important work must continue.
Australia must reboot its already mature and thriving investment and trade ties with Japan and South Korea. Both will be looking to shore up their economic and security alliances and see Australia as a trusted partner.
China remains Australia’s biggest economic opportunity and its chief geostrategic risk. Despite the risks, China will be critical to Australia’s success in Asia, with its unparalleled market scale, appetite for resources and energy, and world-class talent and innovation ecosystem. With the right risk controls, strategy, and capabilities, Australia is well-positioned to maintain and grow its trade and people-to-people links with China.
To thrive in Asia, Australia must be better at learning about it. For those of us working in the Asia-Australia ecosystem, it has been distressing to see the gradual decline of our Asia literacy since the turn of the century. Not a single Australian university has made a significant investment in Asian studies in the last decade. Australian think tanks have embarrassingly limited Asia expertise, and advocacy and capability organizations, such as Asialink and Asia Society, are chronically underfunded. Credible Asia expertise on the boards and executive teams of Australia’s largest companies and within State Governments is extremely rare. Asia proficiency must be a part of a national self-reliance strategy.
Finally, as confronting as the current U.S. leadership seems to many Australians, there is more to the United States than the current administration. Australia should not underestimate the staying power of American innovation, business, and talent. While Trump has unleashed structural forces that will forever change America and the world, the U.S. will remain a major power for the foreseeable future. Australia’s relationship with America, too, will evolve – hopefully from a romantic obedience to a healthy pragmatism. But in the current period of shock and realignment, it’s important to heed the advice of another Australian foreign policy great, Dennis Richardson, who said, “Since when does any country worth its salt auction its alliance to the highest bidder?” America will continue to feature prominently in Australia’s Asia strategy, and the world may yet see another American reinvention.
But Australia’s future lies overwhelmingly in Asia, and the region holds the key to the country’s future of pragmatic self-reliance. In this sense, Trump has done Australia a favor. He has provided an awakening moment, a historic opportunity to be a more confident and resilient country and finally shake off fears of being a lonely outcast in the region.
