The article highlights conflicting views within the Trump administration regarding the imposition of tariffs. While individuals like Bessent and Musk advocated for negotiation, Peter Navarro championed tariffs as essential. This internal debate significantly impacted other countries, particularly Australia.
Australia faced uncertainty regarding potential tariff exemptions. Despite initially receiving positive signals from some officials, Navarro's influence ultimately prevented exemptions. Australia's federal election further complicates matters, delaying potential negotiations.
The article suggests that the internal conflict is beneficial to Trump's strategy, allowing him to maintain control while exerting pressure on other countries. His focus seems primarily on larger economic players, implying that smaller nations might receive less attention.
The article suggests a wait-and-see approach for Australia, anticipating that the resolution of larger trade conflicts might lessen the impact on smaller nations. The ultimate outcome hinges on Trump's decisions regarding broader trade policies.
Politico revealed Bessent flew to Florida on Sunday, where Trump was golfing, to tell the president he ought to pivot his message to one of negotiation rather than punishment. And The Washington Post reported Elon Musk also made a direct appeal to Trump not to proceed with the steep tariffs.
On the other hand, Trump’s tariff-loving trade hawk Peter Navarro, who went to jail rather than comply with a January 6, 2021 Capitol riot investigation, sees tariffs as the be-all-and-end-all. “This is not a negotiation,” he wrote in a piece in The Financial Times on Monday. “For the US, it is a national emergency triggered by trade deficits caused by a rigged system.”
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As international editor Peter Hartcher revealed in his column, Navarro thwarted Australia’s hopes for a tariff exemption in the days leading up to last week’s announcement. Australian diplomats in Washington received encouraging and consistent messages from Bessent, and even from the tariff enthusiast Commerce Secretary Howard Lutnick, that Australia and the United Kingdom might be among the few countries, likely the only two, spared from the “reciprocal tariffs” entirely.
But Navarro carried the day. His argument, buttressed by long-standing grievances about other trade matters, was that if you give one country an exemption, everyone will demand one.
The markets may hate it, but this internal tug-of-war suits Trump. He retains the decision-making power, other countries are forced to offer more, and no one can promise anything because, ultimately, you don’t know who’s going to win out on any given day.
Australia is now, in effect, hamstrung by the federal election and cannot really advance the terms of any deal until it’s clear who will be in charge.
Many on the Australian side believe there’s no rush and that it’s actually better to sit it out for a while and see where things land. It’s also not clear Trump is that interested in the countries hit with the baseline 10 per cent tariff. Asked whether there was room to negotiate below that level, he gave a rambling non-answer and circled back to China.
Lying low may prove the right approach. If Trump can fry the bigger fish, he’s more likely to let the minnows go.
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