Weekend Edition: Does Australia need to spend big on defence?

Friday 14th March 2025

Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.

This week we discovered the extent of Australia’s close relationship with the US. Not that close, it seems with the Trump administration happy to apply a 25 percent tariff on our steel and aluminium exports. Next month, maybe our GST charge will be used as an excuse for a 10%tariff on everything we export.

In Europe through, it’s not just trade that is testing the US relationship. It’s defence as well. Trump wants EU nations to stand on their own and not rely on the US to provide half the hardware and ammunition.

Sam Roggeveen, Director of the Lowy Institute’s International Security Program, says we are entering a different global order. So, what’s Australia’s place in this new world? Do we, for example, need to spend up big, just as Europe is doing, to defend ourselves from China. Sam says not, but we should rethink AUKUS and question why we have the US Airforce operating from our territory.

What’s more, he says we should listen to finance markets, which move on news of tariffs, but tend to ignore geopolitics.

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