'Political tension': Anthony Albanese, the US and China, explained

SBS Australia

08-07-2025

As Prime Minister Anthony Albanese prepares to meet with his Chinese counterpart Xi Xinjping, questions have been raised over how the US will view the visit and whether there could be consequences for Australia. The visit comes after US President Donald Trump announced new tariff rates of 25 per cent on some trading partners, including Japan and South Korea. US tariffs on Australian products remain at 10 per cent, but with relations between the two allies strained, could the US respond negatively to Australia potentially strengthening ties with China?
Here's what you need to know.
Australia's relationship with China Albanese is set to visit China from Saturday, his second trip to the country since he became prime minister in 2022.
China is Australia's largest two-way trading partner, and buys almost a third of Australia's exports. Trade between the two countries was worth almost $312 billion in 2024, according to the Department of Foreign Affairs and Trade.
The relationship appears to be strengthening after a period of volatility, which included China placing restrictions on some Australian exports between 2020 and 2024. China's ambassador to Australia, Xiao Qian, has called for greater collaboration in fields such as AI, healthcare and green energy under a revised free-trade deal between the two nations. In an opinion piece published in the Australian Financial Review, Xiao wrote that it was "time to advance bilateral relations with steady progress". He wrote that China was willing to review the two countries' trade agreement with "a more open attitude and higher standard", including further consolidating traditional areas and actively pursuing new growth areas. Christoph Nedopil, director of the Griffith University Asia Institute, said while there is a "mutual interest" in strengthening the relationship between Australia and China, this has been years in the making.
He does not believe China is seeking to take advantage of rocky relationships between the US and its allies, including Australia.
"China has been trying to make bilateral and multilateral alliances even before Trump was in office, it's not that the stabilisation of the Australia-China relationship only came when Trump was in office," Nedopil said. "And a number of the topics that are on the agenda are not new topics." In a press conference on Tuesday, Treasurer Jim Chalmers was asked whether the Australian government was considering freer trade with China, Korea and Japan in response to Trump's tariffs. Trump announced on Tuesday he would impose tariffs of at least 25 per cent on South Korea and Japan from August unless the countries can strike deals with the US. The US imposed tariffs on China of 145 per cent earlier this year and average US tariffs on Chinese exports now stand at around 50 per cent, according to the US-based Peterson Institute for International Economics.
While Chalmers did not directly address the issue of the US tariffs, he said stabilising Australia's relationship with China was positive for the economy, workers, employers and industries.
"A good, stable, reliable trading relationship with China is key to making sure that our economy continues to grow the right way," he said. "We want good, reliable, diverse trading relationships right around the world. We've got wonderful exports, we've got huge opportunities."
Chalmers said the government was "optimistic about the future when it comes to Australia's place in the global economy".
'Political tension' between Australia and the US While Australia's ties with China could be building, the relationship with the US is somewhat strained, according to David Andrews, senior policy advisor at the Australian National University's National Security College. "It's a relationship we've had for decades and decades now, and we have consistently viewed that as our most important strategic partner and one of our closest international friends and alliances," he said.
"At the same time, it's clear that we're going through a period of political tension and relational tension."
Andrews believes much of the tension has come as a result of Trump's tariffs, which he announced in April, along with "heavy-handedness" of the US government. But he said while the relationship is "challenging" at the moment, diplomacy and international relations are constantly evolving. "There is an ongoing, persistent rebalancing of that relationship to understand what is being asked of us and therefore how much we are willing to accept as well," he said.
"I think that the prime minister has been very clear that [in] putting a very public sense of boundary or limit on what we will do and how far we'll go and the implications for the relationship."
Could the US change tariffs on Australia? At the time of writing, Australia has not received a tariff increase, meaning most of its exports to the US remain subject to the baseline 10 per cent, while there is a 50 per cent tariff on steel and aluminium exports.
The government would continue to try to negotiate a total exemption from US tariffs, Albanese said, even though no country in the world had done so.
Andrews said the "status quo" of the 10 per cent tariff is likely Australia's "best case scenario", and pointed out that no other trading partners had been unable to negotiate an exemption. "Obviously, it would be great if we could get some sort of exemption on the steel and aluminium tariff, for example, but I don't see any evidence that's likely to change," he said. "It's a dispositional change in the way the United States views the international economic order, and we can't convince them otherwise.
"It would be wildly optimistic to think that we could make any, I think, improvement on our situation."
While a tariff reduction or exemption may be unlikely, some have questioned whether the US government could raise tariffs on Australia in retaliation to Albanese's meeting with Xi. Nedopil said it's difficult to predict the actions of the Trump administration. "In a way, the US policymaking at this time seems to be very news-driven and so very short-term sentiment-driven," he said. "So what President Trump might consider as disrespect can lead to a short-term decision announcement that might be more negative." The relationship between China and the US is complex, with the two considered economic and strategic competitors. Nedopil said he believes the rivalry has become "much more intense" on a number of fronts, which he says is "undermining US dominance", which Trump may take into consideration. "And I think the other shift that has taken place ... is that actually a lot of Asian countries and emerging economies are not viewing China as negatively as they used to. "I think there are dynamics that make the US seem not as strong and potentially [not] feel as strong and therefore also trying to hold onto power with a number of different means." Additional reporting by the Australian Associated Press