Donald Trump has officially taken office as the 45th President of the United States of America. He’s not our President. But with Australia and America being intimate allies, and with our economies closely linked, do we need to be worried about what comes next?
You may know me as an investment specialist and a mortgage broker, but I’ve also spent much of my career working in international business. I have amassed experience working all over the world, in some of the biggest economies and commerce hubs – including Paris, London, Bangkok, Toyko and now Sydney – so I know just how important it is to be a global player, in a business sense.
Donald Trump is a proud isolationist, which means he favours building an America that is self-sufficient and less involved in international trade and affairs. His agenda is clearly and openly set on advancing America’s interests, with no mercy on those who he perceives stand in his way.
All of which begs the question: with Donald Trump at the head of the table, how will America’s relationship with and to Australia change?
Trump decisions that impact Australia
Trump has only been in power a short time and, already, he’s been very active.
One of his first orders of business was to kill America’s participation in the Trans-Pacific Partnership (TPP), a deal that included a dozen Asia-Pacific nations; together they account for 40 per cent of the worldwide economy.
Some are calling this a ‘war on trade’. Newspaper headlines are enough to make you think the end of the world is coming, but Rory Medcalf, Head of College at the National Security College at the Australian National University, has released a new policy paper that aims to put it all into context.
The main theme of his paper is this:
Don’t panic, but don’t quite relax, either.
“It is already becoming obvious that a Trump presidency will increase global uncertainty and the potential for instability. Trump has no track record in international or security policy,” Professor Medcalf says.
“The [Australian] alliance with the U.S. remains central to our national security. We have no realistic alternative. Our interests are extensive and our capabilities cannot protect them in full.”
Rory is speaking to a range of issues in this paper, including national security, diplomacy, trade and economic growth.
His analysis is optimistic about the future, confirming that our alliance “is broad and deep enough to survive a Trump presidency, so we need not panic. But nor can we relax. We will need to reframe our engagement with the United States in plain terms of national interests – theirs and ours.” Those who are interested can read the paper in full here.
One of the paper’s recommendations is that Australia should deepen and diversify its security and economic partnerships in the Indo-Pacific region, in an effort to “build a strategic web to bind and complement US alliances”.
This is a fancy way of saying that we should diversify, and quickly, too. The same way that you can get into trouble if you buy too many properties in the one area, Australia as a nation could get into trouble if we rely too heavily on America.
When we look more broadly at our individual real estate markets and our economy, there could be a number of impacts and influences we should consider. For instance, we could see more foreign buyers choosing to park their cash in Australian investments.
Around the time that Trump was elected President, it was reported that the US is a major investor in Australian property. In 2014/15, investment from the United States into Australia was $25 billion, according to the latest FIRB annual report. Of this amount, almost one-third ($7.1 billion) was pitched into real estate.
Instability in the United States could not only see this level of American investment ‘down under’ increase, but it could also prompt other foreigners – I’m looking at you, China – to choose Australia’s ‘safe haven’ property markets over previously-coveted American cities.
Precisely what will eventuate is too early to tell, as Trump’s Presidency is still in its infancy. One thing is certain however: the next four years are going to be an interesting ride, wherever you are in the world.