DCN AUGUST Edition 2019

INTERNATIONAL TRADE
G20 stalemate leaves hard
questions for Australia
Giovanni Di Lieto, lecturer in the Faculty of Business and Economics at Monash
University examines some of the trade tensions
FOLLOWING THE UNDERWHELMING
trade deficit has grown to a 10-year high.
THE EMERGING ECONOMIC ORDER
outcomes of the G20 Summit, there’s a
Current US census data shows the total
Trump’s trade doctrine is on course
growing sense of urgency for Australia to
deficit in goods and services reached
to reshuffle the foundations of the
spell out a new trade strategy. Canberra
$627bn in 2018 (and growing in 2019),
international economic order. In the
needs to gauge the consequences of
the highest level since 2008.
American context, countering the trade
reversing the US trade deficit on the
Trump has made reducing the trade
deficit may bring short-term relief to the
international economic order, and how
deficit, especially of goods with China, a
industrial system. At the international
to adjust to the US foreign policy curbs
major goal of his administration. However,
monetary level, however, it can create
on China’s incursions in the Australian
current reports show a record-breaking
havoc. It’s the US response to the trade
sphere of influence.
$419bn trade gap in 2018 for the US in
deficit rather than the growing deficit itself
goods, not much slowing in 2019 despite
that exposes the fault lines of the American
KEY QUESTION
the tariffs imposed on Chinese products.
global hegemony in the 21st century. As
Ultimately, it’s a matter of asking: How
The easy explanation for the deficit is
a matter of fact, it’s precisely the massive
is Australia going to cope with the
that Trump’s economic policy isn’t working
account deficit that pumps US dollars into
limited agency it has on the emerging
international trade system? Monitoring
trends in the US trade balance is key to
cast light on the path ahead for Australia.
Under Donald Trump, the United States’
as intended, although it may be too soon to
say. The growing deficit may be mostly due
to increased public spending and lower taxes
combined with expedient trade transactions
rushed to avoid newly imposed tariffs.
the global financial system.
Strangling this monetary flow with
policies that encourage exports while
discouraging imports puts at risk the role
of the US dollar as the chief international
Palácio do Planalto
20 August 2019
thedcn.com.au