In May 2025, Australians voted with local issues in mind: housing costs, healthcare delays, and rising prices for groceries and petrol. However, late in the campaign, Donald Trump’s surprise “Liberation Day” tariffs on American imports disrupted domestic debates. Though experts thought these tariffs would barely affect Australia, the political reactions showed how global economics and Australian politics are now deeply connected.
Australia’s Traditional Focus on Domestic Issues
Australia, often called “the lucky country,” has long been shielded by oceans, keeping it apart from global politics. A 2025 survey by the Australian National University showed that nearly 70% of Australians prioritized housing, healthcare, and inflation, while less than 12% focused on foreign policy or trade. This trend persists as Prime Minister Anthony Albanese’s Labor government and Opposition Leader Peter Dutton’s Coalition center their campaigns on domestic economic issues and public services.
AUKUS and Australia’s Strategic Alignment
International affairs have long influenced domestic policies. In September 2021, Australia, under Scott Morrison, formed the AUKUS security pact with the UK and US, canceling submarine orders with France for nuclear-powered vessels. This decision angered France’s Emmanuel Macron and drew criticism from former Australian leaders. However, major Australian parties now support AUKUS. By the 2025 election, the pact was no longer a key issue but underscored Canberra’s view of its alliance with Washington as crucial, despite America’s political challenges.
Energy Policy: A Lingering Partisan Divide
AUKUS unified major parties on defense, but climate and energy policies remained debated. The Labor government pushed for a swift shift to renewables, backed by its Future Made in Australia plan to boost local solar panel and battery manufacturing. Critics pointed out that China controls over 70% of global solar panel production, sparking worries about increasing economic links with a strategic competitor.
The Coalition proposed a “pragmatic decarbonisation” plan, combining renewables with nuclear power plants. They claimed this would lower costs and aid nuclear submarine operations. However, a March 2025 Newspoll revealed only 18% of Australians backed nuclear power, a consistent figure over the years. The Coalition’s attempt to link defence and energy policy didn’t catch on, as long-standing anti-nuclear views remained strong.
Cost-of-Living Pressures and Economic Management
Despite record-low unemployment (3.6 percent) and steady GDP growth (2.4 percent in 2024), households complained of rising mortgage rates, rental shortages, and surging grocery bills. Labor sought to claim credit for its suite of measures: targeted tax cuts, energy-bill relief grants for low-income families, and a $3 billion housing-supply investment fund. The Coalition countered that high immigration was exacerbating infrastructure bottlenecks and put forward tighter migration controls—yet migration ranked only seventh among voter concerns, according to the Australian Election Study.
Australia excelled during global inflation shocks, but both parties admitted that fluctuations in commodity prices, fueled by China’s demand for iron ore and LNG, were crucial for national income. Thus, Canberra’s economic destiny is tightly bound to international markets.
Enter Trump’s “Liberation Day” Tariffs
As campaigners readied for the final debate, Donald Trump, now a private citizen but influential in Republican circles, unveiled new tariffs on US imports from key allies like Australia. Named “Liberation Day” duties, these tariffs targeted American electronics, agricultural machinery, and wine, acknowledging Australia’s rising wine exports. Ironically, since Canberra imports more US goods than it exports, economists predicted that domestic consumers would face most price hikes, not Australian producers.
The opposition criticized Labor for not protecting Australian exporters. Coalition leader Peter Dutton urged the government to defend Australian jobs and oppose the U.S. Labor assured consumers it wouldn’t impose tariffs, highlighting the strong US-Australia economic ties, including $2.8 trillion in shared pension investments in U.S. stocks.
Political Manoeuvring on Tariffs
Albanese and Dutton aimed to balance supporting the US alliance while distancing from Trump. Albanese joked about Trump’s lack of mobile phone use, saying he couldn’t call to complain. Dutton criticized the appointment of Kevin Rudd, a known Trump critic, as ambassador to Washington, questioning why someone who criticizes an ally was chosen. However, Trump later posted on social media, claiming he didn’t know who Peter Dutton was, weakening the Coalition’s criticism.
On social media platforms like X and TikTok, memes humorously showed Australian politicians trying to contact “Trump HQ” for help, only to get a busy signal. Political analysts highlighted that both major parties avoided discussing the issue due to the risks of economic conflict with the US. Trade expert Dr. Simone McCarthy pointed out that Australia’s ties to US financial markets—via pension funds, investments, and student loans—mean any tariff repercussions could be significant.
Election Outcome and Voter Sentiment
Labor won a historic victory in Australia, securing 72 out of 151 seats in the House of Representatives, marking its largest majority in decades. Peter Dutton lost his marginal seat of Dickson, and the Coalition’s two-party vote share plummeted to a record low of about 33 percent. Analysts credited Labor’s triumph to its emphasis on everyday economic concerns and its perceived skill in handling global challenges.
Just 5% of voters saw Trump’s tariffs as a key issue, far less than healthcare (36%), cost of living (28%), and climate change (19%). This highlights voters’ underlying concern about global events and the need for leaders to handle external challenges effectively.
Implications for Australia’s International Outlook
With the election over, Canberra must balance its growing ties with the U.S. and its economic reliance on China. The Albanese government supports AUKUS and ANZUS while diversifying supply chains to avoid trade disruptions. Recently, ministers signed agreements with India and the EU on critical-minerals processing and battery technology. The threat of future U.S. tariffs and unpredictable American politics is significant. Foreign Minister Penny Wong has started talks with Washington to create a trade-cooperation council for regular discussions on tariffs and regulations. Wong emphasized, “We cannot assume that economics and security will always align.” The goal is to advance national interests and those of partners.
Looking Ahead: Lessons Learned
The 2025 federal election revealed that even Australia, often seen as insulated, is vulnerable to global events. Dr. McCarthy highlights that “trade shocks and geopolitical tensions” can impact everyday life and influence elections. Political strategists must recognize that voters expect effective domestic policies and strong global leadership. Prime Minister Albanese, in his second term, has a clear mandate to achieve net-zero emissions by 2050, advance submarine projects under AUKUS, and strengthen economic resilience through diverse partnerships. However, he must stay alert to unexpected global disruptions from places like Washington or Beijing, which can quickly dominate headlines.
