Can Albo get a tariff deal with Trump?

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Opposition Leader Susan Lee is urging the Prime Minister to carve out a tariff exemption from the Trump administration.

It comes as the UK strikes a deal with the US for a partial exemption and as calls for Australia to drastically increase its defence spending continue, with Australia's top military chief weighing in.

And it's been one of the tightest elections in history, and it looks like teal candidate Nicolette Buller may have clinched the once safe Sydney seat of Bradfield.

But that might not be the end of the story.

In fact, these things really end so easily.

Welcome to politics now.

Hi, I'm Patricia Carvellis.

And I'm David Spears.

And David, as Donald Trump continues to wage what is a tariff war and, you know, taco himself out, you know, he always apparently wimps out.

Does he, though?

The UK has carved out what they would be very happy about, an exemption on steel and aluminium tariffs, avoiding that 50% tariff.

To be clear, they still get a tariff.

Like, they're not sort of completely clear.

They're going to be paying a 25 tariff on metal goods but

it's given the opposition something to come in and say hey why aren't we getting that the prime minister needs to deliver and it's a fair point for the opposition to make i think and just you know before we get to the substance and um uncertainty of trump for for susan lee yeah i think it's fair enough to say well hey the uk's got a uh a carve-out or a some sort of carve-out they're getting a 25 tariff on steel and aluminium compared to 50 percent uh for us and the rest of the world.

Why can't we get that?

But I'm happy to work with the government on these issues.

The tone I thought was interesting, it was hardly the Peter Dutton, I will get a deal that no one else in the world can get from Trump on tariffs.

It was more measured, but a legitimate point.

If the UK can get this carve out, why can't we?

But on this position, right, that the UK's landed on, I mean, this is why it's so head-scratching to try and keep up with Trump's tariffs.

From what I can understand, the UK, yes, did a deal back in May with Trump on trade, but it's a little unclear what that's meant for these steel and aluminium tariffs.

They're now going to be 25%, not double the 50%, but that's only temporary.

It might end up being 50%.

It might end up being nothing.

It's so hard for investors, let alone the rest of us, to keep up with where Trump's going on the trade front.

And hence the taco line that you mentioned, Trump always chickens out.

He hates that line.

But it is.

you know, it's a reality that one day it's one thing, the next day it's another thing, and the next day it's something else for a different country.

It is pretty hard to keep up with where these things are going.

It's impossible.

It's impossible.

And it's impossible to plan around a strategy.

That's the key bit.

Planning around a strategy for how to deal with it is very difficult because it keeps changing as well.

So, you know, how hard do you go in if he ends up capitulating on other tariffs or

if their own court system says no to, you know, at least the Liberation Day tariffs?

like these this is the complication with it all isn't it yeah and that's still playing out in the courts the liberation day tariffs are separate to these steel and aluminium tariffs sorry this is just so confusing the liberation day tariffs are the 10 blanket on everything as far as australia is concerned higher for other countries particularly china that's all playing out in the u.s courts as to the fate of those liberation day tariffs look for the prime minister as well i think anthony albanese has also taken a pretty reasonable approach to this he's maintained a pretty consistent line and that is these are not the acts of a friend These are only going to damage American consumers.

You're going to increase costs in your own economy.

And he's held that line.

And, you know, he's not about to start

scraping and groveling at the feet of Donald Trump.

He's due to meet him in a couple of weeks' time or just under a couple of weeks' time on the sidelines of the G7 summit in Canada, where he's indicating that he'll make that position face to face for the first time to Donald Trump.

But he's not about to start, it doesn't sound like we'll get to this offering, you know, we'll start spending a lot more money on defense or do something else to get a break on these tariffs.

That's not the approach that Anthony Albanese is flagging here.

Well, let's get to that because it's the perfect segue to that point.

The big story that's been playing out, it broke kind of Friday last week and has been escalating since is US Defence Secretary Pete Hegseth calling for Australia to boost its defence spending and then the quantification of that to 3.5% of GDP.

So just the back story, which we've mentioned a bit in this podcast this week, but, you know, we are currently around 2%.

We will get to about 2.3% of GDP.

So Labor is lifting defence spending, but not to the extent, obviously, that Pete Hegseff has called for.

And then

we've had a really fascinating way that the Prime Minister has dealt with it, which I think has been lauded broadly, even from the people who would like to see defence spending increased, interestingly, but accept that,

you know, he's got to talk about our sovereignty and not just saying oh yes you asked us

he's been smart about the politics hasn't he david yes although i'd say on the defence spending front i mean smart not to say we're going to do it because we want a break on tariffs you shouldn't you know um link the two in in that such way and and by the way didn't didn't Peter Dutton during the campaign suggest that defence issues should be on the table in tariff negotiations?

But then didn't they say, no, no, no, we didn't mean that.

That's right.

So it was one of those messy days where nothing made sense.

That's right.

Look, they shouldn't be linked and they're not being linked.

But I do think there is quite a bit of pressure on Anthony Albanese when it comes to defence spending.

And even, you know, from people like Kim Beasley, former Labour leader, former Defence Chief Angus Houston and Peter Dean, they both did the Defence Strategic Review.

You know, there's a long list of people, and even people he's not all that happy about at the moment, like ASPI, the Strategic Policy Institute, all calling for an increase in defence spending.

Anthony Albanese doesn't want to set this arbitrary target of two and a half or three or even three and a half as Pete Hegsef is suggesting.

We're not going to get to three and a half anytime soon, clearly.

But he thinks it's better to buy the stuff you need rather than set some arbitrary target, throw money at defence and let them

go and waste the money as so often they have at defence.

A couple of interesting developments today.

The CDF, the Chief of Defence Force, Admiral David Johnston, has been speaking at an ASPE conference that's been underway, funnily enough, and he's made some very interesting comments.

He, of course, is not about to publicly say, I think we should go to 2.5%

of defence spending.

He says he'll deliver his advice, frank and fearless advice to the government through the regular channels.

But he has said a few things publicly at this conference.

Firstly, he said that defence is fully expending its budget at the moment.

That's a good thing, he says.

We've uplifted our acquisition delivery, our workforce is improving, and he said that that does put pressure on our budget that we have to make choices on.

Now that sounds to me, PK, like a Defence Chief saying, we're spending every cent we can, we have, and we're having to make choices.

In other words, we'd like to be able to do more.

He went on to also say, and this may be a little concerning, I think, for some to hear from the Defence Force Chief, we're having to reconsider Australia as a homeland from which we will conduct combat operations.

And then he also went on to say we may need to operate and conduct combat operations from this country.

He suggested we maybe haven't been thinking in these terms since World War II.

And that, that, as I say, is a pretty blunt message, I think, from the Defence Force Chief about how the nature of the strategic outlook is changing.

You know, we've got used to, haven't we, for so many years, for decades, that warfighting is a far-off thing, be it Iraq, Afghanistan, what's happening in Ukraine at the moment.

Even conflict over Taiwan.

I think the idea that we would have to consider fighting combat operations on our homeland is going to be jarring for some.

But so I thought that was significant.

The Defence Force Chief said that alongside his comments on defence spending, which sounded to me very much like a Defence Chief saying we could really use a few more dollars.

And it's fascinating because it's not the direction we've been moving in, right?

We've been focusing on, of course, AUKUS and the submarines.

We moved really away from Army.

So talk me through that.

Like to me, that sounds like a disconnect between the strategy and what the Defence Chief is telling us.

Yeah, it's a good question, right?

Because, I mean, nuclear-powered submarines

have the capability to operate far away from our shores.

That's the whole point.

They have that stealth capability, of course, to remain submerged and travel very long distances with that nuclear power.

And, you know, as everyone's been pointing out, the ability to operate in the Taiwan Strait, for example, without being detected.

Supporters of nuclear submarines would also argue that they do have a big strategic benefit in protecting our homeland as well, because you simply don't know where they are for long periods of time.

And that is a deterrence to adversaries.

But look, the CDF, the Chief of Defense, has also spoken this morning about technology and how it's changing.

And this fascinating development out of Russia, where Ukraine's drone attack is just this latest example of the spider web strategy they used, where they sent in these crates of drones that automatically opened up and took out a whole bunch of Russian bombers at far-flung airfields, one of them like 4,500 kilometers from the Ukrainian border.

So reaching deep, deep, deep inside Russia.

I mean, the point for Australia is, does

our distance from potential adversaries really keep us safe anymore?

Well, arguably no, because technology is changing so fast.

The CDF said

about this.

The difficulty with technology developed now, he said in Ukraine, the cycle is somewhere up to 12 weeks before tech investments become irrelevant because of counter strategies.

So what does he mean there?

You know, the Russians or the Ukrainians might come up with some new drone technology, but 12 weeks later, it's irrelevant because a counter-strategy is being developed.

It's moving so rapidly that the idea that you're going to buy a warehouse full of this latest kit, well, it could be out of date in a few months' time, let alone a few years' time.

That makes it very difficult to know what to buy, how much of it to buy.

He also talked about, you know, our northern bases, if you like, this idea of combat on Australia, you've got to think about not just the munitions that you're going to need, but the logistics around that.

The logistics chain, we're we're just not ready for this.

So it's thinking more holistically, I suppose, about how we approach this new strategic, worrying strategic outlook.

It's going to become an increasing issue for the government.

It's not just

a one-off call from Pete Hegseth.

This is obviously a move which lots of nations are on

notice on, right?

Like the UK spending more, the EU, like this is where we're at.

Exactly.

Look at what Keir Starm is doing.

This is a British Labor Prime Minister Minister who is already committed to 2.5% and a long-term 3%

defence spend.

And he's this week with his big announcements after their defence strategic review really link this to jobs in the UK.

It's about

the defence industry

building submarines, building other munitions.

They're going to have

all these missile factories and so on.

It's all framed for a Labour Prime Minister in the context of jobs as much as anything.

I found that really interesting and perhaps gives us a signal.

I mean, we see a bit of that with AUKUS, don't we, about the jobs in South Australia and Western Australia that will come through this.

I suspect we could see more of this.

Although the Treasurer, who as we record, he might still be on his feet.

He's been talking about national accounts figures today in case anyone's sweating on those.

Growth in the March quarter was 0.2%.

So just

made positive growth, 1.3% for the year.

But anyway.

Pretty slow.

Yeah, pretty slow, pretty much as expected.

And his argument, though, can I say, in relation to it being slow, slow is any growth is good in the global environment in the global environment right on that yeah we had some natural disasters in those first few months of the year of course and yes a hugely volatile global environment i think he is right on that but um the point i was going to make is he's also taken questions on defence spending uh given the debate this week and i just thought this was interesting he said uh we're already making a very substantial increase in investment in our budgets and we're proud to be doing that He goes on to talk about what we're doing.

There are always people who say we should spend more, always people who say we should spend less.

I don't know if there's too many saying we should spend less right now on defence, but I just thought it was interesting.

It's funny you say that because even the Greens the other day I asked

and they didn't actually call for less.

They said we shouldn't do what the US has asked for, the 3.5%.

But I didn't hear any commentary saying we should spend less than the 2% we're spending.

This is the Greens.

This is the left.

So it just struck me that this morning we've had the defence chief, you know, he's not saying give us more money, but he's kind of saying give us more money is my reading between the lines of how he's viewing the strategic outlook.

And we're spending every penny we're getting from the government right now, was his message.

And then you've got the treasurer a couple of hours later saying, Oh, look, you know, there's always people who want to spend more, some want to spend less.

We're already making a very substantial increase.

Again, he's not ruling out a further increase, but he's the guy who's got to fix the budget, right?

Get us back from deep deficits as far as we can see, and one day try and get the budget back in a bit of health.

So he's clearly not as excited about huge dollops of extra defence spending right now.

And it's important to mention, and it was, you know, not on my list of things for us to talk about, but it's a natural spot for me just to mention that Jim Chalmers, in also talking about the GDP figures, has also said basically he's not convinced the coalition is open to negotiations on reforming the superannuation tax.

I thought that was interesting.

Yeah, and that's an important point because, you know, Ted O'Brien, who's the coalition's Treasury spokesman now,

new job for him,

extended what looked like perhaps an olive branch or an opening of the door.

But now all of these coalition people, including, of course, Matt Canavan from the Nationals, are pouring cold water on that idea.

But of course, if you want the budget to be in the sort of sense of having a healthy outlook where you are able to raise enough taxes and bring enough money in to spend on things like defence, little things like this should be

obviously considered, right?

Like you can't not lift taxes or look at how to get revenue into your government if you're going to be spending more on defence.

I mean that's just maths 101.

Yeah, look, a couple of things.

What's one of the messages from this amazing election result for Labor?

People are quite happy with the spending, right?

Whether it's on social welfare measures.

We are at pretty high levels of spending, highest in 40 years outside of COVID.

And people are clearly pretty comfortable with that, despite the deficits that we're in.

People did not like the idea of spending cuts, i.e.

public service cuts, that the coalition took to the election, right?

So that's one of the big takeouts, I think, from the election.

If we're going to spend more on defence, are people really going to want to cut elsewhere?

No.

We're going to need to find new revenue, which brings us to this superannuation.

And I would suggest the government's going to have to look at other ways that it can raise more revenue because people clearly aren't in a mood for spending cuts.

But we clearly are in a mood and a need to spend more on all sorts of areas, including defence.

You can understand the Treasurer being a bit sceptical about what the Coalition is going to do on super, because you do hear one thing from one of them and another thing from another one of them on the Coalition side.

That makes it difficult for the government, I think, right now, to put too much faith in what the Coalition is saying.

Aren't they meant to be having a review of all of these things anyway?

While that process is going on, you've got various positions being taken on things like defence spending, on things like superannuation.

We're starting to hear people like James Patterson, Tim Wilson, Angus Taylor start to indicate where they're going to land on things, even though they're meant to be reviewing things.

Well, they're front-running it.

They're front-running it.

They're sort of trying to lead where the debate should go.

And that's not entirely unreasonable.

If you've got a clean slate and you want to shape where your policy goes.

That's true.

I would be doing it too if I had to.

But otherwise you're staying out of the debate, right?

You're sitting on the sidelines for

vacating the field, indefinitely, and they can't do that.

Yeah, this is one of the difficulties of the situation they're in.

They've got to review everything, but they

can't just sit there on their hands.

The next six months is going to be really difficult for them.

There's no doubt about it.

Look, the other thing that's happened, and in fact, Susan Lee's about to address the media, I'm sure she'll address this, but that seat, that hotly contested seat of Bradfield has now been won by the teal candidate, Nicolette Buller.

Now, the Liberal candidate, Giselle Captarian,

so close, but didn't get there, it seems.

Liberal sources are kind of talking about whether they might take it to court but look right now that hasn't been announced.

It might be later I don't know.

Just a couple of observations before I throw over to you.

I mean it's a significant blow I think for the Liberal Party.

Let's not forget that Giselle Kaptarian is a moderate Liberal woman who you know looks like the kind of figure that they want leading the Liberal Party one day.

And I, you know, I don't mean to exaggerate it, but she is the sort of future, multicultural Australian woman, like the future of what this party needs to look a bit more like if they are going to be electorally successful.

She was even given a shadow ministry position by Susan Lee, which will now have to be given to someone else, I guess.

Shadow Assistant Ministry.

So it's sort of the outer rank, but yeah, you're right.

But either way, a job to show that they wanted to invest in her.

And it was a signal, I think, as well.

It was sort of sending a message.

Now she doesn't make it wow that that will be a big blow for them yeah so this is someone who hasn't won a seat who was allowed to vote in the leadership ballot and voted for Susan Lee of course not Angus Taylor in a narrow win for Susan Lee who is as you say named you know in the front bench lineup sure the most junior position but not a backbencher she's a shadow assistant minister so

but this is someone who's not in parliament now the Liberal Party will have to decide do they want to go through the court of disputed returns over this they'd need well, a couple of considerations.

One, are there grounds for a dispute of this outcome?

As in, is there evidence that there was something wrong in the count that they can take to that court?

And secondly, the outcome of that, if they're successful, would be a by-election.

Do they want to fight a by-election in Bradfield right now?

I don't know what you think, PK, but I suspect there might be some reluctance to go down that path.

I think there would be reluctance.

Look, there's two ways of seeing it like anything, and there are different views in the Liberal Party as far as I can see from my own conversations.

But it would be a really fascinating battle, right?

Because

it would be, you know, vote for me.

Now you know we've been smashed, but please vote for me because I want to go in there and change the place.

Like, what would, you know, what would the pitch be?

It would be an entirely different pitch, you'd think.

I tell you what it would do.

Because right now, post-election, as we've been talking about for weeks, we've got this war in the Liberal Party, not to mention the coalition more broadly, but in the Liberal Party, right, over their direction.

Do they try to win back metropolitan Australia where they've been wiped out by coming back to the centre, as Susan Lee's been talking about, or do they try to differentiate further from Labor by being more conservative?

If you suddenly have a by-election in a seat like Bradfield up against Nicolette Buller as a

community independent, that is going to force the Liberal Party to campaign as a more moderate party, right, to try and win back a seat like that.

So I think it would, if anything,

in my estimation,

require the Liberal Party to look and sound during the course of a by-election campaign to be a more moderate party than perhaps some in their ranks would like to be.

Look, we're not there yet.

I don't know whether they're going to dispute this.

It would be hard, though, like if you think about

their just give you a scenario of one reason why probably they will err on the side, I think, of probably not the right time.

So they're reviewing net zero by 2050.

I can imagine that's a very easy thing, not

for a Giselle Capitarian to go around and doorknock.

So how do you feel about climate change?

Well, I'm personally in favour.

We are reviewing our entire commitment to the net zero Paris.

I mean, come on.

Yeah, exactly.

How do you fight a by-election in Bradfield if you don't have a position on net zero?

I just find it's pretty hard to see.

Having said all that, this is going to be really disappointing for Susan Lee and for the Liberals not to have Giselle Capitarian there because you're right, this is the very sort of new member that they really need.

So that's a real loss to them.

Shout out to the community independents though.

This is the tightest of wins, but I just saw a press release pointing out that in terms of their vote share, community independent candidates, so not just those successful, but candidates generally, recorded a nationwide vote share of 4.84%.

So that's national.

That's up from three years ago, where it was 3.3%.

Obviously disappointing to see for those community dependents Goldstein, where Tim Wilson's defeated Zoe Daniel, but this one in Bradfield will perhaps make up for that.

And that national vote share, yeah, it's interesting that it's up and from 3.3 to 4.84 is, well, a significant rise.

All right, David, I will watch on Sunday, but of course, you'll be back in our feed for Insiders on Background on Saturday morning.

Yes, we're digging a little further into the defence issue and I'm quite fascinated by what we've, I mentioned earlier, what we've seen in Ukraine with the, what they're doing with drone technology.

I know we've got a lot of debate about where our defense spending should be as a percentage of GDP, but I'm also fascinated about the sort of the kit and where technology is going and how fast and what Australia should be thinking about and all of that.

So we're going to dig into a bit of that on the on the podcast this week.

Good.

Get your nerdy side out and get ready for that.

All right.

I'll be back in your feed with Fran for the party room tomorrow.

If you haven't sent a question, we're looking for new people to send new questions.

The party room at abc.net.au is where you send your voicemail.

See you David.

See you, Pico.