Actions Speak Louder Than Words: Why the United States Should Support Australia in Its Trade Showdown with China

By William Yuen Yee

“We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China,” Chinese Foreign Ministry spokesperson Zhao Lijian said about the China-Australia trade war. Tensions between Canberra and Beijing have escalated into a war of words and tariffs. While Canberra sits nearly 10,000 miles away from Washington, the Australia-China trade showdown has important implications for the United States and its reputation abroad. For the Biden administration to really prove that “America is back” as a credible partner, the United States should help its ally Down Under by showing solidarity and providing financial assistance.

China is Australia’s top export market, accounting for 39 percent of Canberra’s total exports and worth $104 billion in 2019. As a result, the trade row between the two countries has inflicted serious pain on Australian exporters: Australia has lost $7.3 billion in exports over the past 12-months, and the National Farmers Federation warned the dispute could cost their members $37 billion over the next decade. 

Chinese economic pushback against its liberal democratic trading partners is not unique to Australia. Yet Beijing has been especially eager to target Canberra for three reasons. First, Australia remains one of China’s most vocal critics: It was one of the first to support the Hague’s 2016 tribunal ruling that rejected China’s expansive claims in the South China Sea and ban Chinese telecom firms like Huawei and ZTE from its 5G networks. Second, China views Australia as America’s loyal pawn, describing it in official government statements as “dancing to the tune of a certain country” and “obedient to the U.S.” Indeed, Australia’s decision to block Huawei and ZTE over national security concerns followed a U.S.-led diplomatic campaign against the companies. Third, Australia is a convenient target: It is in China’s Asia-Pacific backyard, highly dependent on China’s market, and arguably the weakest member of the U.S.-led Quadrilateral Security Dialogue (which also includes India and Japan) that aims to contain China. 

The trade conflict has significant consequences that extend beyond the borders of both countries and into the broader U.S.-China contest. Former Australian Prime Minister Malcolm Turnbull has correctly observed that Chinese leaders “are trying to make an example” of Australia and warning other countries about the costs of bucking Chinese power. If China pulls Australia away from the United States, it will weaken U.S. power in the Indo-Pacific and significantly dent Washington’s credibility as a world power. And while Australia’s trade minister recently said that Canberra is “prepared to pay” the economic price of defying Beijing, this will not be easy without U.S. assistance.

A skillful Australian response to Chinese pressure could demonstrate China’s inability to bully countries into submission to the broader international community. For this reason, Australia presents a critical opportunity for the Biden administration to back up its rhetoric about rebuilding alliances. One major advantage for the United States in its rivalry with China is its network of democratic allies, which retains an overwhelming economic and military advantage. To preserve this invaluable alliance system (and competitive advantage), Washington should uphold its end of the bargain and demonstrate sincere commitment to its allies—particularly in their times of need. 

Regrettably, the United States has not yet done enough to assist its long-time Asia-Pacific ally. While Secretary of State Antony Blinken said the United States “will not leave Australia alone” to face Chinese economic coercion, trade data shows that American exports to China of products like wine, beef, timber, and cotton have increased over 2021—filling the void left by Australia. As former Australian ambassador to China, Geoff Raby, said, Washington can support Canberra by refusing to “backfill into the Chinese market where Australian trade has been blocked.” The United States should show solidarity with Australia, not benefit at its expense. 

Rather than allowing Australia to exemplify the negative repercussions for countries who stray from Beijing’s political line, the United States should support it with concrete actions. 

First, Washington should continue to back Canberra’s complaints against Chinese tariffs at the World Trade Organization. 

Second, the United States can fill the void left by China’s market. For example, America could continue to buy the wine that Australia would have sold to China, as the White House did for a holiday party in 2020. This course of action aligns with Matt Klein’s proposal to create a “strategic Shiraz reserve,” in which the United States purchases and holds foreign commodities that lose sales to Chinese economic coercion.

In this way, successfully defending Australia in its trade war could provide the United States with a model for protecting other allies against future Chinese coercion. Such a defense would bolster America’s reputation as a reliable partner and underscore the value of allying with it.

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