Treasurer Jim Chalmers has expressed concerns regarding the economic repercussions of Ex-Tropical Cyclone Alfred and recent tariffs introduced by former US President Donald Trump, ahead of the upcoming federal budget announcement. During his speech, which was momentarily disrupted by protests, Chalmers was confronted by demonstrators advocating against new coal and gas projects.
Chalmers noted that the combined effects of the cyclone and the tariffs could hinder Australia’s economic growth, potentially leading to price hikes and persistent inflation. He highlighted that the financial implications of cyclone recovery could directly subtract $1.2 billion from the nation’s GDP, raising the total budget allocation for natural disaster support to a staggering $13.5 billion. He cautioned that this situation could reduce quarterly growth by up to 0.25 percent, alongside increased inflation pressures due to rising construction costs and damaged agricultural outputs affecting staples such as fruits and vegetables.
While the exact impact on the budget remains uncertain, Chalmers anticipates it will be considerable. He also raised alarms about the escalating global trade tensions and how the introduction of tariffs might negatively impact Australia’s economic perspective. Chalmers remarked that the longstanding rules governing global economic engagement are currently undergoing significant changes, which could further complicate trade.
He indicated that while the immediate effects of steel and aluminium tariffs would likely be manageable, the indirect consequences could result in a more significant GDP decline, potentially worsening by 0.1 percent by 2030. The Treasury has indicated that on multiple fronts, the indirect impacts of a trade war could be fourfold compared to the direct tariff effects. In an environment characterised by retaliatory measures, Chalmers warned that these tariffs can lead to prolonged economic repercussions, including more substantial GDP reductions and heightened prices.
Despite these challenges, he stated that Australia will not engage in a retaliatory tariff war with the US, asserting that “our response to this will not be a race to the bottom on tariffs.” Chalmers is set to reveal the federal budget on Tuesday, March 25, amid these pressing economic concerns.