Australian Treasurer Jim Chalmers Talks Tariffs, Defense Spending

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We're just here outside of Durban for the G twenty Finance Ministers in the Central Bank meeting that it's been going on here for the last couple of days. Wrapping up today, hopeful that there will be a bit of solidarity and a communicate coming a little bit later. We're very pleased to be joined by a guest that Jim Chalmers, who is the Treasurer of Australia's come a long way for this meeting, so thank you very much for taking the time.

Thanks for the opportunity all of them.

Yeah, I think we have to stay with the elephant in the room. Two weeks away from this Trump deadline. What is the status of negotiations between Australia and the United States right now?

Well, Australia has the baseline tariff of ten percent and some additional areas like steel in aluminium, copper, pharmaceuticals, and so we're engaging with our counterparts in the US like almost every other country is in the world. We're pretty well placed and we're well prepared to deal with these tariffs.

OK, because ten percent is basically, as far as we can tell, the lowest passible deal. It's effectively what you'll have with the United Are you happy with that? And does that warrant retaliation or no?

We've decided to go for resilience in our own economy rather than retaliation. You know, the ten percent tariff is the lowest of any countries, but we've made it really clear that we think the appropriate tariff, consistent without trade agreemen is zero. We see these tariffs as self defeating, we see them as an act of economic self harm. We've made that very clear. Bad for the US economy, bad for the global economy, and therefore not good for Australia.

Do you see any progress passable on stealing aluminum?

It remains to be seen.

I mean we've been engaged more or less constantly for some months now, whether it's still and aluminium or some of the more recent announcements around.

Copper and pharmaceuticals.

Our approach to is to engage at every level as much as we can to get a better deal for our workers and our industries, our exporters, our industry and our investors. And that approach will continue to guide us.

And in terms of the negotiations around pharma, we've for two hundred percent as a possible figure from the United States. Is the changes to Australia's pharmaceutical benefits scheme? Is that something that's on the table because the Trump ad Mistress have been very focused on non tariff barriers, that part of the conversation.

Absolutely zero chance. You know, we couldn't be clear.

Our pharmaceutical benefit scheme is a crucial part of our architecture, our policy architecture.

It's something we're very proud of.

We've made it really clear that we're not prepared to negotiate or diminish or weaken the PBS in order to get a deal.

We've been clear about that from the beginning.

We're working through the potential consequences of pharmaceuticals being caught up in these escalating trade tensions. We do have quite a substantial export offering into the US when it comes to pharmaceuticals. But how this potential tariff might work. We're working through with the industry and with the administration.

And I'd like to also get your appraisal of the evolution of the multilateral kind of co op cooperative system, because obviously it's been dealt quite a shark over the

Well, I've been involved in the G twenty in different roles for a big chunk of the last two decades, and we've been through four economic shocks in that period. The one that's the reason this one, the fourth one, is different to the first three is that it's primarily induced by policy, by decisions.

Taken around tariffs.

And so I think what that means for this type of multilateral engagement is that people recognize here that at a time when there's lots of volatility.

Uncertainty and unpredictability.

The best defense against that, the best antidote to that, is more engagement, more resilient economies, more robust supply chains, more reliable markets for our exports. And so I think that's really the color and the context for these discussions. And from an Australian point of view, Australia is a huge believer in multilateralism. We're a huge beneficiary of free and open markets, and so we come to these discussions in that light.

And so concretely, where do you see you kind of the most motion sort of being affected that in terms of different relationships with countries, ones that you maybe have not talked to in the same way in the past, Well, have you seen that sort of changing Concretely, I just.

Think there's a real recognition here that when these tariffs and escalating trade tensions, the uncertainty that comes from that, but also from conflict in the Middle East, conflict in Eastern Europe, whole range of uncertainty.

I think heartening message from.

The colleagues here that we've been engaging with these people are not retreating into their own corners. They're working out how to make our own economies resilient. That's a big part of the Australian agenda as well. But we're trying to de risk these relationships without the coupling, and I think that's a major theme.

It's a heartening.

Theme, because the alternative would be to pretend that at a time when these trade tensions are escalating and these conflicts and important parts of the world, to pretend that we can just retreat into our own corners. That again, I think would be self defeating. It's certainly not the Australian strategy.

And you mentioned defense as one of these the sort of issues has been a huge amount of pressure from the United States for allies to spend more on defense. You saw that most concretely a NIEDO a couple of weeks ago, where you had that boost in pledges for three and a half percent effectively of defense. Do you think Australia could get to that figure at three and a half percent? Do you think that would be appropriate to join sort of allies at that level?

Well, first of all, I mean it is a big part of the conversation here, particularly with European friends. You know how they will find the three and a half percent of GDP and how they'll account for the other one and a half percent of GDP for national security related spending. For Australia, we are already quite by our standards, quite dramatically escalating our defense spending. You know, we're taking it from two percent of GDP up to two point

Of other budget priorities.

But we say to American friends, and we say to the world more broadly, we are already increasing our defense spending because we think it's important at a time where we are seeing this heightened uncertainty in the world.

And given just sort of the global volatility uncertainty and the outlook, how continent about are you of your inflection forecas and your growth forecast. How susceptible do you think those are to downward revision book.

There's always an element of uncertainty when it comes to forecasting economic outcomes, but especially when you know global markets are extremely.

Volatile right now.

But one of the things we're very proud of as Australians is there's only two countries here at the G twenty that last year had continuous economic growth, inflation with the two in front of it, and unemployment in the low furs. No major advanced economy has been able to over the last three years maintain that growth and have those inflation and employment outcomes, and so why.

We're proud of that is we've made very.

Substantial progress on inflation now sustained progress on inflation. It's given our central Bank the confidence to cut rates twice already this year. But we've done that without paying for it with much higher unemployment. Unemployment is now four point three percent, historically low, the lowest average unemployment over the last three years for any other government. In the last fifty years, we've created one point one million jobs and

Very proud of.

Well, Jim Cholemas, thank you so much for your time here on the sidelines of the G twenty outside of Durban and South Africa. Thank you very much so those are the thoughts there from the Australian Treasurer. And sort of multilateralism in the age of MAGA and the path forward here at the G twenty