Trump Torches Global Trade Order, Risking Global Recession: What It Means for Australia and the AUD

In a fiery declaration that upends decades of global economic consensus, Donald Trump has announced sweeping tariffs on nearly all imports, marking what deVere Group CEO Nigel Green calls a “seismic day for global trade” and a “detonation” of the modern commerce framework.

Speaking from the White House Rose Garden, the former President unveiled a flat 10% tariff on all imported goods, alongside sharply higher levies targeting specific partners: 34% on Chinese imports, 20% on European products, 24% on Japanese goods, and 10% on those from the UK. He declared 2 April “Liberation Day” for American trade and vowed it would “make America wealthy again.”

Yet the financial world has responded with alarm, branding the move not as a liberation but a liability. “This is how you sabotage the world’s economic engine while claiming to supercharge it,” warns Nigel Green. “Trump is blowing up the post-war system that made the US and the world more prosperous, and he’s doing it with reckless confidence.”

Economic Delusion or Patriotism?

Trump is pitching the policy as a patriotic effort to correct trade imbalances. But economists are warning it may have the opposite effect—fueling inflation, triggering a global recession, and hurting the very consumers and businesses it purports to protect.

“Tariffs are taxes—plain and simple—and American consumers will bear the brunt,” says Green. With thousands of products now affected—from smartphones to supermarket staples—higher prices are virtually guaranteed. In an era of already-stubborn inflation, the timing is particularly perilous.

The OECD has warned that a 10-percentage point rise in tariffs across major economies could slash global GDP by 0.3% over three years, while increasing inflation by 0.4 percentage points annually. Green adds: “Wages won’t keep up with price hikes, and the squeeze on households will likely be intense.”

The Domino Effect: Investment, Inflation and Interest Rates

Markets thrive on stability—but this announcement has injected deep uncertainty. “When businesses don’t know what trade will look like next quarter, they stop hiring, stop investing, and freeze plans,” Green explains. “This chilling effect is how recessions begin.”

Bond markets are already showing signs of stress. As governments navigate record levels of debt accumulated during the pandemic, rising borrowing costs—driven by inflation fears and risk repricing—pose a serious threat to fiscal stability. “This is a body blow to fragile fiscal frameworks,” Green notes. “For nations still recovering from years of shocks—financial, pandemic, geopolitical—Trump’s trade war is a major setback.”

Moreover, the global dominance of the US dollar is under question. “Any whiff of unpredictability or politicised policy makes global investors nervous,” Green says. “That trust is hard-earned and easily lost.”

What This Means for Australia

For Australia, the ramifications could be far-reaching. As a highly trade-exposed economy, Australia depends on the rules-based international order Trump is undermining. Escalating global tariffs threaten demand for Australian exports—not only from the US but from key trading partners caught in the crossfire, such as China, Japan, and the EU.

The Australian dollar (AUD), already sensitive to global risk sentiment, could see heightened volatility. With global trade volumes expected to decline and investor appetite for riskier assets diminishing, the AUD may face downward pressure, particularly if China—Australia’s largest export market—is further destabilised by the tariffs.

Australian businesses operating in globally integrated supply chains may also suffer. From mining firms relying on overseas machinery, to manufacturers sourcing components internationally, cost pressures are likely to rise. At the same time, reduced consumer demand globally could hurt exporters in sectors like agriculture, education, and tourism.

This could put further pressure on the Reserve Bank of Australia (RBA) as it balances domestic inflation with weakening global demand. Should Trump’s tariff war trigger a broader slowdown, the RBA may be forced to reconsider its monetary stance amidst a deteriorating global backdrop.

Backpedalling Expected—But Damage May Linger

Nigel Green believes a reversal is likely within 12 months: “Economic gravity will kick in. As the costs become clear and the political pain sets in, we expect a backpedal and/or reversal of many tariffs. The markets, the public, and eventually even the policymakers won’t accept these self-inflicted wounds.”

But until that point, the global economy must brace for what Green calls “one of the most disruptive moments in trade history.”

“It would appear that Trump is peddling in economic delusion,” he concludes. “But the global economy runs on reality—and the reality is that this will likely cause harm on a scale that can’t be spun away.”

For Australia, a country intricately tied to global trade and economic stability, that harm may be more than just collateral—it could strike at the heart of national prosperity.

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