Albanese's program may escalate US-Australia trade tensions

Australian Prime Minister Anthony Albanese has announced a $750 million program to support local steel and aluminium manufacturers. This initiative aims to enhance technological development and improve global competitiveness in these sectors. Albanese emphasized the goal is to produce more goods in Australia, creating jobs and boosting local industries. However, experts warn that this move could escalate tensions in the ongoing trade war with the United States. Recently, the U.S. imposed a 25% tariff on Australian steel and aluminium imports. This follows accusations from U.S. Commerce Secretary Howard Lutnick that Australia has been selling aluminium below market value. Dr. Naoise McDonagh, an expert in geopolitics and trade, believes the new subsidies could be used by former President Donald Trump as a justification to further argue that Australia is undermining American manufacturers. He noted that while Trump often uses misleading claims, the announcement could provide him with a talking point. The Albanese government's plan also includes aspects of green technology, which some believe could lead to complaints at the World Trade Organization (WTO). McDonagh indicated that Australian leaders might increasingly support such subsidies as nations like China grow in economic power. Furthermore, New South Wales Treasurer Daniel Mookhey stated that the state government aims to prioritize purchasing local steel and aluminium for infrastructure projects. He highlighted that sourcing materials domestically would be more efficient and cost-effective in the long run, especially for maintenance needs. While the WTO generally disapproves of subsidies, it accepts funding for research and development as acceptable, as long as they are accessible to all companies, domestic or foreign. The funding announced by Albanese is part of a larger $1.7 billion initiative aimed at fostering local innovation and manufacturing.