Amid global trade uncertainty, the PM has shifted his language on the US alliance

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The European Union's leadership has been meeting, at length, with Chinese Foreign Minister Wang Yi in Brussels this week, talking about trade and issues like Ukraine, ahead of an EU-China summit later this month. At the same time, the EU's members are battling internally about the joint position they will put to the United States before the pause in the unilateral tariffs, announced by US President Donald Trump in April, comes to an end next week. And in Washington, Trump announced one of just three deals yet made with other countries since his "Liberation Day" on tariffs on April 2. The deal with Vietnam is the first in our region and with an economy which has such close links with the Chinese economy. The world of international diplomacy, strategic positioning, and trade negotiations has never been quite so busy or as complex as it is just now. The daily noise and theatre from Washington, along with the misery and horror of Ukraine and Gaza, tend to dominate the news cycle. But as Australia tries to find its path through the uncertainty flowing out of Washington, it is important to understand that Trump is not the only issue — or player — to be dealt with, or pressure point for rapidly changing relationships. U.S. President Donald Trump holds up a chart of "reciprocal tariffs" A US-Vietnam trade deal Both the US and China are in a trade "arms race" with other countries — from Africa, to Europe, to the "BRICS" countries like Brazil and to Central and South-East Asia. That sets up new complexities in relationships for most other countries with the two superpowers, and with each other. Vietnam is a prime example of this. It was among the countries hardest hit by tariffs announced by the US in April: 46 per cent. Trump announced this week a deal which would cut the tariff imposed on Vietnam's exports to the US — predominantly textiles, computers and computer components — to 20 per cent, while he said in a Truth Social post that the deal (the details of which have not yet been seen ) meant "we will be able to sell our product into Vietnam at ZERO Tariff". (Seems, er, fair.) But there is a particular catch to the deal. The US will also charge Vietnam a 40 per cent tariff on "trans-shipping", a measure seen by most analysts as clearly aimed at China. It would affect goods coming through Vietnam from other countries (read "China") to avoid high tariffs on Chinese goods. This is a bit of a nightmare for Vietnam given its interlinkages with the Chinese economy, having become one of the outsourced factory hubs for the much larger country. After just five months in power, US President Donald Trump predictably has driven a wrecking ball through the foundations of American society. In recent weeks, he's re-opened an old front from his first term. China's commerce ministry said it was "conducting an assessment" of the agreement for signs it might be done at the expense of its interests and would "take countermeasures to safeguard its legitimate rights and interests". China had already been ramping up its interests in the region, with President Xi Jinping visiting Cambodia, Vietnam and Malaysia in April and signing over 45 cooperation agreements which included expanded market access for agricultural goods, technology exchanges and infrastructure developments. And there have been renewed warnings from Beijing to some of its near neighbours about the deals they might do with the US in the wake of the Vietnam announcement. The Wall Street Journal reported in April that the US planned to pressure more than 70 countries to reduce trade ties with China. And among the various countries being threatened by Trump in the past couple of weeks has been Japan. The ripples for China of the Trump caravan are felt from Panama to Africa. Ripples for China The nature of the Vietnam deal has also sent shivers through other countries in the region in the way it has revealed the US strategy. Washington has been putting pressure on countries in the region, including Indonesia and Thailand, to impose restrictions on Chinese investment, as well as export controls. The ripples for China of the Trump caravan are felt from Panama — which pulled out of China's Belt and Road Initiative after US concerns about the Panama Canal — to Africa, where Trump intervened in a 30-year conflict between Rwanda and the Democratic Republic of the Congo. China has a big presence in Africa and both superpowers are racing to secure critical minerals supplies which also are abundant there. And Xi last month had already announced to African leaders the removal of customs duties on products from all African countries except Eswatini (formerly Swaziland). The sheer extent of all this meddling — driven by the race for critical minerals and rare earths — puts paid to the expectation that Trump would be withdrawing the US from world affairs and illustrates how his approach is driven firstly by trade rather than necessarily a geo-strategic world view. Which brings us back to Europe. Europe's coveted market facing huge tariffs The massive European market is a prize that both the US and China covet, and would dearly love to deprive the other of. While the spectre of the world being divided into two trade blocs — with Europe opting for one or other — has alarmed some analysts, the very messy nature of all the trade deals now being done suggests that is unlikely in the short term. It does seem likely to disrupt the relationships many other countries have with each other economically, as well as supply chains globally. The president of the European Union, Ursula von der Leyen, has said it is impossible for the EU to reach a detailed deal with the US before next week's deadline. But with the threat of Europe facing 50 per cent tariffs, and Germany in particular alarmed about the impact of Trump on its car industry, the pressure will be on to reach some sort of accommodation. That's even as the EU (and European NATO members) grapple with the geo-strategic questions as well as the trade ones brought about by war in Ukraine, Russia and the US disengagement in Europe. The South China Morning Post reported on Friday that Chinese Foreign Minister Wang Yi told the European Union's top diplomat, Kaja Kallas, this week that Beijing did not want to see a Russian loss in Ukraine because it feared the US would then shift its whole focus to Beijing. The European Union's leadership has been meeting with Chinese Foreign Minister Wang Yi in Brussels this week. Australia's alliance with the US All this is important context to assess the prospects for Australia. That is, the relative silence from the US about our position may mean that things perhaps won't get worse. But it is a timely reminder that we will likely face new pressures from Beijing about any deals we do with Washington which China believes will work against its interests. At the same time, the disruption in trade relationships both in the region and in Europe offers opportunities and an obligation to do a lot of lateral thinking about our place in the world. Prime Minister Anthony Albanese gave a speech on Friday in honour of the "father" of Australia's alliance with the US, John Curtin. Significantly, he framed the alliance in different robes to the usual ones. Curtin, he said had, above all, given Australia "the confidence and determination to think and act for ourselves". While the alliance was "a pillar of our foreign policy" and "our most important defence and security partnership", it ought to be remembered "as a product of Curtin's leadership in defence and foreign policy, not the extent of it". "Curtin's famous statement that Australia 'looked to America' was much more than the idea of trading one strategic guarantor for another. Or swapping an alliance with the old world for one with the new. It was a recognition that Australia's fate would be decided in our region." It is a significant shift in language on the alliance by the prime minister, and a shift forged in these complicated times. Curtin's legacy was that Australia "needed an Australian foreign policy anchored in strategic reality, not bound by tradition", he said. "Dealing with the world as it is, not as we would like it to be." Australia cannot predict, or control the challenges we will face, the PM said. "But we can determine how we respond." The times offer huge opportunities as well as challenges.

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Source: abc_net