For those who love Donald Trump or hate the looming US President who’s toting an assortment of tariffs for the significant world economies that the Yanks trade with, I have good news that comes from a man who should know the Trump tariffs might not be a problem for Australia!

It's believed the expected tariffs will hurt global trade, add to inflation and reduce the number of interest rate cuts that central banks will dole out in 2025.

Fortunately, we might get off lightly if you can believe the analysis of Reserve Bank deputy governor Andrew Hauser.

The Australian’s Jack Quail reported on what Hauser revealed at the annual dinner for Australian Business Economists. And one reason is that we don’t export all that much to the US. “Our direct exposure to US tariffs is likely to be small,” he said. “We have strong comparative advantages in raw materials and services that other countries need, both to power traditional industries and the industries of the future. We have a track record of nimbly reshaping our trading relationships”.

He also argued that our floating dollar and an

independent central bank would act like “powerful shock-absorbers” if a Trump trade war escalated.

That said, he noted that we’re a big trading economy and a tariff feud involving China, Europe and other countries such as Canada and Mexico could have negative economic and even financial implications.

Despite those assurances, Hauser warned no outcome could “be definitively ruled out” because Australia is “intimately linked to the world economic and financial system at every level. History shows that when trade, labour and money flow freely in the global economy, we thrive – but when countries turn inwards, we suffer,” he said.

Interestingly, some economists think if a trade war results, we could benefit because there’ll be a diversion of cheap goods looking for new markets and consumers.

The RBA’s planning analysis found the following:

1. An “extreme” trade war between the US and China would lower the Australian dollar.
2. It would reduce gains on the local stock market
3. And possibly force the RBA to cut interest rates strongly to arrest slowing growth.

Ahead of Trump inhabiting the White House on January 20, his early tariff plays have been outlined. These include a 10% tariff on their exports into the US on top of existing duties and a 25% slug

on Mexican and Canadian products. And there’s the threat of a “universal baseline tariff” of 10% on all ­“foreign-made goods”!

A President Trump will make investing in stocks more challenging because economists think the overall impact of many of his election promises of tax cuts and deportations of illegal immigrants could lead to a blowout of the US budget deficit by a whopping $7.5 trillion over a decade.

The current US deficit is around US$1.8 trillion, so many Trump plans could create global financial problems that stock markets might not like.

I’m happy to play along with the Trump revelry that’s fuelling the rally on Wall Street, and other share markets like ours, but by mid-2025, I might become more defensive with my own portfolio and those of my financial planning clients.

Investors are now living in testing Trump times, but one thing is certain about this incoming President is that he doesn’t want to see Wall Street put in a stock price shocker while he’s in charge. A rising market is like a positive popularity poll for Donald J. Trump.

Given what he pulled off in 2024, I hope he plays tariff like a genius, even if Andrew Hauser’s analysis is right.