Overview

Every US general election carries implications for Australia. But many observers would insist that this time, it’s different, that the trajectories of the United States under a second Trump administration or a Biden administration seem quite different, as do the implications for Australia.

But what is really at stake for Australia? What policy arenas — or elements of politics, the economy, or culture and society of the United States — are likely to be impacted by either election outcome? Among these points of change or continuity, which are of relevance to Australians and Australia’s national interests? How might Australia best respond?

These are the questions addressed in this series of assessments by the researchers of the United States Studies Centre, a collection designed to help frame Australia’s relationship with the United States under either election outcome.

China and the remaking of the American strategic mindset. Irrespective of the election outcome, an enduring legacy of the Trump administration is a resetting of the American strategic mindset: great power rivalry is now the singular external challenge faced by the United States, principally with China and across myriad domains, expanding to non-traditional and emerging vectors of state power. There is no meaningful partisan dispute on this point. Policy modus operandi will differ, perhaps markedly, between a second-term Trump administration and a Biden administration. But the historical significance, high stakes and breadth of the challenge facing the United States is accepted across the American political spectrum.

Australia is an “ally of substance” and can speak accordingly. Australia comes to second Trump term or a Biden administration with impeccable alliance credentials — in no small measure a function of Australia being on the “frontlines” with respect to the China challenge and responding credibly. Few countries enter the Washington post-election environment with as much goodwill, a position of strength that will serve Australia well under either election scenario. This capital should be deployed to ensure Australian voices contribute to the evolution of Indo-Pacific policy in a second Trump administration or to the strategy reviews likely to be undertaken early in a Biden administration.

A goldilocks China policy? If the Obama administration emphasised areas of cooperation with China, and the Trump administration sees itself in strategic competition with China, then a Biden administration will seek to do both.

  • Having taken some costly actions with respect to China (tariffs, bans and scrutiny on Chinese investment in particular industries), neither a Trump administration nor a Biden administration will backtrack, at least not rapidly. Even among Trump’s political enemies, there is an acknowledgement that China is a strategic competitor and a different US approach was overdue, that Trump actions have bought the US leverage vis-à-vis China and are important signals of US resolve.
  • Climate change is central to Biden policy priorities and frequently cited as a domain in which a productive, cooperative relationship with China is welcome — an obvious point of divergence with the Trump administration.
  • Biden promises his China policy will be “more scalpel, less sledgehammer," especially on economic and technological decoupling. Should Biden win, developing and operationalising this nuanced China policy will be contested and delicate work, and will compete with many other domestic and foreign policy challenges. Australia has much at stake and should not — and will not — be a passive bystander.
  • Normalising and deepening ties with allies and partners figures prominently in Biden’s foreign policy aspirations but will come to the fore in the Indo-Pacific. Both sides of US politics acknowledge that the magnitude and breadth of the China challenge can only be effectively met in partnership with allies, but this acknowledgement seems more foundational under a Biden administration.
The depth of the public health and economic crises wrought by COVID-19 in the United States suggests that absent a national security crisis, foreign policy and defence will struggle for “above-the-fold” political and public attention in the United States after the election.

Will international affairs struggle for daylight in a crowded US policy agenda? The depth of the public health and economic crises wrought by COVID-19 in the United States suggests that absent a national security crisis, foreign policy and defence will struggle for “above-the-fold” political and public attention in the United States after the election. But should he win, Biden will draw on a deep reservoir of foreign policy and national security talent, experienced with the machinery of government and the cumbersome nature of a presidential transition and already far advanced in their planning. There will be plenty of signals of intent and priorities from a nascent Biden administration with respect to foreign and national security policy. Senate confirmation of senior officials will slow down the implementation of new policy settings.

Several observations follow:

  • But a Biden national security team will be eager to reassure allies and partners that notwithstanding the depth of the COVID-19 pandemic — and the usual vagaries accompanying a transition of power — that the ability of the United States to project power and influence is not diminished.

Several observations follow:

  • Don’t underestimate the force of inertia. Considerable continuity should be expected with respect to defence and foreign policy in the short term, under either election scenario.
  • Burden sharing is here to stay. Capable and committed US allies such as Australia and Japan will continue on their trajectories of more self-reliance in foreign policy and defence in the Indo-Pacific. Policy distraction and overload in the United States, bureaucratic inertia associated with any transition of power and longer-term strains on US defence budgets leave allies such as Australia and Japan with little alternative.
  • Early mover advantage? Policy overload and bureaucratic inertia under any election scenario can be parlayed into an opportunity for Australian interests. Australia should continue working with other allies and like-minded partners on elements of collective security in the region, establishing policy facts-on-the-ground and mindsets more aligned to Australia’s national interests, and entrenching Australian points of view ahead of and in anticipation of the position and commitments of a Biden administration.
  • In an alliance refresh, what does Australia want? If elected, a Biden administration turns to restoring more conventional relationships with allies — in the context of accepting China and the Indo-Pacific as the greatest strategic challenges faced by the United States — Australia has an opening for moving the United States on long-standing but slow-moving issues in the alliance. Examples include genuine defence industry integration, using the deep and long-standing levels of trust in the bilateral relationship to develop supply chain resilience (e.g., critical materials and frontier technologies), greater presence and influence in both planning for regional contingencies and contributing to US higher-level or longer-range military and strategic planning.
Australian Prime Minister state visit to Washington, September 2019
Australian Prime Minister state visit to Washington, September 2019
Getty Images

E pluribus duo? Partisan polarisation is a defining characteristic of contemporary American politics. Consider the drivers of this polarisation: deep economic and racial inequality; geographic “sorting” generating de facto partisan segregation, exploited by partisan gerrymanders; political institutions that cede disproportionate power to highly motivated but immoderate voices (non-compulsory turnout, primary elections); a news media landscape disrupted by social media, incentivised to cater to distinct audiences segmented by partisanship and ideology, much like social media itself. None of these are disappearing soon.

  • In the shadows — but increasingly less so — and exacerbated by the COVID-19 pandemic and malign foreign actors, conspiratorial thinking and movements have flourished.
  • Polarisation drives political and policy distraction in Washington, threatening America's response to public health, security and foreign policy crises. Openness to international trade and investment, alliance commitments, defence spending, defending against foreign interference are all examples of issues that only a few decades ago were relatively immune from partisan rancour in the United States, but of importance and relevance to Australia and its national interests. Australia’s national interests are also squarely implicated should partisan polarisation continue to slow America’s response and recovery from COVID.-19
  • Social media and the ubiquity and speed of the internet means there is more cultural, intellectual and social cross-fertilisation from the United States into Australia than ever before. This is overwhelmingly a positive development, with Australian civil society drawing inspiration from and collaborating with American counterparts, in realms too numerous to count.
  • But this inspiration and collaboration has less socially desirable facets, with the flourishing of conspiratorial thinking and movements in the United States easily imported into Australia. COVID-19 and its prominence in the US election are amplifying the prominence of opposition to vaccines and public health measures (masks, social distancing, lockdowns) and threats of violence directed against elected political leaders.
The presidential helicopter Marine One
The presidential helicopter Marine One
Getty Images

Relationship management. Through deft and creative diplomacy and our “frontline” position vis-à-vis China, Australia enjoys a close relationship with a sometimes unpredictable and unconventional Trump administration. But how does Australia navigate Washington under either election outcome?

  • Even more unconventional in a second term? Presidencies often mature and even mellow in a second term. But will this be the case under Trump? If Trump wins re-election — again, defying polls, pundits and his many critics — Trump and his advisors will understandably feel validated and emboldened, with foreign policy one of the domains in which that validation is operationalised. “America First” could take on a larger, legacy-defining role in the foreign policy of a second Trump administration, perhaps with more risks for the NATO countries, South Korea and possibly Japan than for Australia. Trump’s palpable fury with China over the COVID-19 pandemic — and a determination to “make China pay” — carries with it some risk of surprise, unilateral actions by the United States against China. US scepticism of multilateral institutions and processes that lie at the heart of the “rules-based international order" will almost surely continue in a second Trump administration.
  • A return to convention makes Australia just one of many allies. A Biden administration will seek to renormalise alliance and partner relationships and modes of transacting business in Washington. Other countries that have felt “out in the cold” in Trump’s Washington will compete with Australia for influence with a Biden administration. Australia’s alliance credentials and our “frontline” status with respect to China are tremendous assets here. But risks abound, with NATO partners understandably keen for a post-Trump reset of strategic US priorities and alliance management, along with internal competitions for resources across the US government threatening to distract attention from the Indo-Pacific.

Biden and climate change. A Biden administration will be under intense pressure to see that campaign promises for climate change policy responses are seen through. Biden has said he will return the United States to international climate change fora (e.g., the Paris Climate Accord) and promised a net-zero 2050 target to decarbonise the US electricity sector by 2035 supported by massive investments in clean energy technologies.

  • Policy divergence? Biden has pledged to put pressure on other countries to adopt more ambitious targets, using American economic leverage and by integrating climate change initiatives into security and trade policy. This could have significant implications for Australia, which ranks last in the OECD in greenhouse emissions per capita.

The scale of any Biden climate change policy ensemble will depend on whether Democrats also take the US Senate and can work around or reform the Senate’s 60-vote supermajority rule (the filibuster). Absent Senate control, Biden’s ability to move on climate will be limited to executive orders and regulations, all of which will be subject to legal challenges.

Climate change policy could well become a domain in which the United States — at least in appearance, if not in law and policy — vaults from being more sceptical of targets and international agreements than the Australian government to precisely the opposite.

But the ambition to inject climate change considerations into security and trade policy lies more squarely in the purview of the executive branch, with tremendous scope for rule-making and regulations with implications for Australia, say, if the United States regulated international investments in energy-producing or carbon-emitting industries and firms, mandated carbon offsets, or instituted preferred supplier rules or emissions-based duties or tariffs.

Accordingly, climate change policy could well become a domain in which the United States — at least in appearance, if not in law and policy — vaults from being more sceptical of targets and international agreements than the Australian government to precisely the opposite. If Biden is elected, this is a policy domain that will warrant close and constant attention, a potentially new dimension of the US-Australia relationship presenting many opportunities and challenges.

The United States Studies Centre will update these assessments post-election, as the shape of either a second Trump administration or a Biden administration takes shape. The strategic significance of the Indo-Pacific will not change under any case, nor the centrality of Australia’s relationship with the United States as foundational in Australia’s response to the rapid pace of change in the region. Irrespective of the election outcome, the mission of the United States Studies Centre has never been more valuable.

On behalf of the Centre’s researchers, fellows and staff, thank you for your interest in our analysis of America and our insights for Australia.

Simon Jackman
Chief Executive Officer
October 2020

American defence strategy and the Indo-Pacific region

Ashley Townshend

Overview: The United States will seek to bolster conventional deterrence in the Indo-Pacific — a task fraught by strained defence budgets and disagreements within the US defence establishment over how to reorient the military for great power competition with China.

Biden contrasts with Trump: A Biden administration will likely pursue a more multilateral approach to strategic competition. A second Trump term is likely to exacerbate frictions between Washington and Indo-Pacific allies on burden-sharing and its zero-sum approach to competition with China.

What Australia should do

  • Regardless of who wins the election: Australia should continue to actively contribute to a strategy of collective defence and the maintenance of a stable Indo-Pacific order, and work with like-minded regional partners to offset shortfalls in US military capacity.
  • During a Biden administration, Australia should: Develop mechanisms for combined contingency planning, accelerate defence industry integration and gain greater insight and input into US military and strategic plans in the region.
  • During a second Trump term, Australia should: Look to build common ground on China policy among Washington and its allies, while seeking greater US investment in Australian defence infrastructure.

Long-term trends

Owing to the enduring nature of the challenges and constraints facing US defence strategy in the Indo-Pacific, there will be significant areas of continuity and overlap no matter who wins the 2020 election. Three are likely to stand out, with mixed implications for Australia.

First, the Indo-Pacific will remain the US Department of Defense’s declared “priority theater.”[^1] Given the strong bipartisan and bureaucratic support for the Pentagon’s 2018 National Strategy (NDS), this should come as no surprise. The NDS issued a clarion call for the United States to prioritise “inter-state strategic competition” with China ahead of other global security commitments, setting in train a series of renewed efforts to wind-down military operations in the Middle East, bolster deterrence by denial in the Indo-Pacific, and invest more in advanced research and emerging capabilities to maintain the United States’ eroding military-technological edge.[^2]

This agenda is set to continue. Leading Biden advisors, like Michèle Flournoy and Ely Ratner, have strongly endorsed the NDS framework and its core focus on re-establishing conventional deterrence vis-à-vis an assertive China.[^3] The Democratic Party as a whole, and Joe Biden specifically, publicly support a Middle East drawdown and an end to the United States’ “forever wars,” a platform that is at least partly motivated by a recognition that the Indo-Pacific is the strategically more important region.[^4] While the Trump administration has been rightly criticised for failing to sufficiently advance certain NDS objectives in the Indo-Pacific — such as bolstering the military’s forward posture and operations designed to blunt Chinese aggression — the Pentagon’s greater focus on this theatre will likely endure.[^5]

The National Defense Strategy issued a clarion call for the United States to prioritise “inter-state strategic competition” with China ahead of other global security commitments, setting in train a series of renewed efforts to wind-down military operations in the Middle East, bolster deterrence by denial in the Indo-Pacific, and invest more in advanced research and emerging capabilities to maintain the United States’ eroding military-technological edge.

Second, the ability of the next administration to implement this Indo-Pacific agenda will be complicated by disagreements within the Department of Defense over how best to prepare the armed forces for strengthening deterrence regarding China. There is a broad consensus in favour of the NDS’ layered approach to conventional deterrence by denial.[^6] But the relative importance placed on shaping the battlespace, blunting potential attacks and winning a major power war — and what these distinct priorities require by way of short and long-term investments in capabilities and infrastructure — is subject to considerable bureaucratic rivalry.

The United States’ military services — its Army, Navy, Marine Corps, Air Force and Coast Guard — are now primarily focused on retooling their inventories for high-intensity, state-on-state conflict. On the other hand, US Indo-Pacific Command — which is responsible for the regional application of military force and receives its personnel and materiel from the services — must prioritise the day-to-day requirements of shaping the battlespace, countering low-intensity coercion and maintaining ready forces and critical enablers, like infrastructure and munitions stocks, for immediate use. There are also broader non-partisan disagreements across the defence establishment over the right balance between legacy and advanced systems, the optimum size of the force and specific platforms like ships, and the speed and scale with which the US military should invest, experiment and field next-generation capabilities.[^7]

Some of these tensions will be addressed in favour of Indo-Pacific Command by the establishment of a Pacific Deterrence Initiative (PDI), which enjoys bicameral and bipartisan support in Congress.[^8] This bill is intended to strengthen the Command’s lethality, posture and capacity for operational experimentation and enhanced engagement with allies and partners.[^9] Indeed, the PDI is likely to be expanded in the next presidential term owing to strong congressional support. But with funding for this initiative expected to come in around US$300 million in 2021 — compared to US$4.5 billion for the Pentagon’s European equivalent — it will not inoculate either administration from facing hard choices on NDS implementation in the Indo-Pacific.

Finally, the next administration will face static or, more likely, falling defence budgets, compounded by massive fiscal pressures. This means that the three to five per cent real annual growth needed to resource the NDS will not be achieved, leading to billowing strategy-resource shortfalls and increasingly difficult choices about global strategic priorities.[^10]

The budget issue is both structural and political. Although congressional Republicans are more bullish in calling for high defence budgets, the Trump administration has only achieved three to five per cent real growth in the defence budget once and is now presiding over a two per cent real decline in the 2021 budget.[^11] This is partially due to a deal between congressional Republicans and Democrats in 2019, which rounded out ten years of spending caps.[^12] More importantly, it reflects the reality of the United States’ rising deficit which, even before COVID-19, was projected to reach US$1 trillion in 2020 and average US$1.3 trillion over the next decade — a forecast that led Defense Secretary Mark Esper to conclude in February that the Pentagon’s budget would remain stagnant in the near-term.[^13] Now, following trillions of dollars in COVID-19 stimulus and lost revenue, the deficit is likely to reach 98 per cent of GDP by the end of 2020, exceeding the post-Second World War record of 106 per cent of GDP by 2023 and projected to rise to 2.5 times GDP by 2050.[^14]

The next administration will face static or, more likely, falling defence budgets, compounded by massive fiscal pressures. This means that the three to five per cent real annual growth needed to resource the NDS will not be achieved, leading to billowing strategy-resource shortfalls and increasingly difficult choices about global strategic priorities.

These deficit forecasts are already triggering bipartisan concerns about the national debt and a return to the politics of austerity, which could lead to renewed defence spending caps, particularly if different parties control Congress and the White House.[^15] These structural constraints on future Pentagon spending will be a major challenge whoever wins the election, requiring US global defence priorities to be negotiated down or military and operational risk to be spread more widely.

Together, these three trends shaping America’s Indo-Pacific defence strategy reinforce the need for Australia to play a more active role in contributing to the maintenance of a stable regional order.[^16] While Canberra will welcome ongoing prioritisation of the Indo-Pacific as the United States’ core strategic focus, it should be under no illusions that the next administration will be able to quickly, easily or substantially deepen the US military’s strategic footprint in this part of the world.

Changes in US Indo-Pacific posture and the fielding of new weapons systems have typically played out over presidential terms, not calendar years. At the margins, more emphasis on rapid innovation, experimentation and fielding of new capabilities — as the US Air Force is exploring — or increased investment in munitions, fuel, military infrastructure and operational funds through the PDI are possible and hold promise for Australian involvement and collaboration.[^17] But the combination of rising budgetary pressure and the need to make difficult trade-offs — on both the scope of the NDS and how to realise its Indo-Pacific deterrence objectives — suggests a slow rate of change.

To advance Australia’s interests in upholding collective deterrence and defence in this context, Canberra will need a more direct stake in the next administration’s approach to Indo-Pacific military strategy. With other like-minded partners, Australia should seek to shape US posture and spending decisions in line with regional interests and prospective contributions.[^18]

Blue book

What changes under Biden

A Biden administration will be far more consistent and collectively minded in working with US allies and partners, with the restoration of the “liberal international order” a likely hallmark of Biden foreign policy.[^19] This will be welcomed by Australia and other Indo-Pacific nations that are increasingly alarmed by President Trump’s aggressive transactionalism. A Biden administration will not mean an end — or even a decline — to US efforts to boost burden-sharing by allies and partners. But Biden and his team are likely to bring a greater willingness to accommodate differences in interests, threat perceptions and contributions to collective action than has recently been the case.[^20]

One reason for this is that Biden’s national security team have a multidimensional view of the role of America’s allies and partners. Potential administration appointees such as Jake Sullivan, Abraham Denmark and Mira Rapp-Hooper have argued that allies and partners — particularly close and capable ones like Australia — must be empowered as regional order enhancers.[^21] This growing role for allies is consistent with Australia’s expanding foreign and defence policy agenda and may make Biden’s team a more natural partner for implementing and building on this year’s ambitious Australia-US Ministerial Consultations (AUSMIN) agenda.[^22]

A Biden administration will likely seek focused contributions from Australia to deterrence and security cooperation in the Indo-Pacific. According to Michèle Flournoy — widely expected to be Secretary of Defence under a Biden administration —“the United States should work closely with its allies and partners to make a clear-eyed assessment of what each country can contribute to stabilizing the region and deterring [China’s] increasingly aggressive behaviour.”[^23] This could include new posture arrangements, enhanced operational presence, cooperation on advanced long-range strike and a more multilateral model for undertaking intelligence, surveillance and reconnaissance, anti-submarine warfare and special operations activities.[^24] Crucially, such a collective approach to defending the regional order is needed to offset the United States’ declining relative capacity and is anticipated by Canberra’s 2020 Defence Strategic Update, designed to see Australia contribute more independently to shared deterrence objectives.[^25]

A Biden administration will not mean an end — or even a decline — to US efforts to boost burden-sharing by allies and partners. But Biden and his team are likely to bring a greater willingness to accommodate differences in interests, threat perceptions and contributions to collective action than has recently been the case.

Two possible concerns for Australia in a Biden defence strategy stand out. First, Democratic Party preferences for lower defence spending will make it harder for the Pentagon to service its Indo-Pacific goals. Biden, to be fair, has a deep appreciation for the military and says that budget cuts are not inevitable.[^26] And while some congressional Democrats are very vocal in calling for major cuts to the defence budget — for reasons of pandemic relief, austerity or “guns versus butter” concerns — it is unlikely a Biden administration will heed calls for a ten per cent reduction as progressives have proposed.[^27] Still, with domestic rebuilding the top priority for most Democrats, Biden will face greater partisan pressure than Trump to reduce military spending, especially if Democrats take the Senate, with some predicting a five per cent cut during his administration.[^28]

Second, a Biden defence strategy could become overly global and ideological in ways that are unhelpful to Australia. There is a strong trans-Atlantic orientation in Biden’s foreign policy team — focused on prioritising NATO and standing up to Russia — and a deeply-held belief that restoring the liberal international order requires America’s global promotion of democratic values.[^29] These sentiments stand behind Biden’s promises to “reinvent the US alliance system with a democratic underpinning” and to “strengthen the coalition of democracies that stand with [America].[^30] Both are noble ideas that Australia in many ways supports, particularly where strengthening good governance, setting technology norms, defending free trade and similar issues are concerned. But they have the potential to distract a Biden administration from the Indo-Pacific. An expansive liberal order restoration agenda may frustrate Pentagon efforts to reduce its military footprint in Europe and lower priority regions. Placing human rights at the heart of US foreign policy risks alienating strategically like-minded, but illiberal, Indo-Pacific nations.[^31] While these are not entirely zero-sum issues, they are difficult to balance in terms of resources and foreign policy bandwidth.

What Australia should do

Australia should reinforce the urgency of Indo-Pacific defence requirements as a priority for a Biden administration. Canberra should leverage Biden’s preference for a multidimensional and multilateral approach to strategic competition to carve out a larger role for Australia in setting and contributing to regional security policy. A more explicit strategy of collective defence — to deter a more assertive China — will require Washington and Canberra to address thorny questions of political and operational risk head-on. To advance this strategy, Australia should propose new mechanisms for combined contingency planning, push for genuine two-way defence industry integration and seek to gain insight and input into US military and strategic planning at earlier stages than is currently the case.[^32] Australia should pursue these objectives as part of ongoing efforts to transform the Australia-US alliance into a vehicle for collective defence and for strengthening each country’s contribution to maintaining regional order.

Red book

What happens under Trump

Donald Trump’s re-election likely intensifies two trends in US Indo-Pacific defence strategy. First, the president’s scepticism towards alliances will likely increase, leading to bitter burden-sharing negotiations and impeding efforts to forge a collective regional strategy. Having already soured alliance goodwill by seeking a five-fold increase in host-country payments to keep US troops in South Korea and Japan, a re-elected Trump will hold an emboldened position to finish these negotiations on his terms and withdraw some US forces.[^33] Trump could initiate new quarrels with other allies and partners, thereby complicating the Pentagon’s efforts to advance defence cooperation, combined exercises, and posture changes. This would exacerbate the decline of regional perceptions of US reliability, which is still reeling from Trump’s unilateral imposition of tariffs (on many nations), sanctions (on China) and abandonment of the Trans-Pacific Partnership.[^34] With regional public attitudes towards the United States at record lows,[^35] support for the US alliance system may begin to fray — undermining Australia’s interests in a robust and networked security order.

Canberra should use the Pentagon’s global force posture review and bilateral posture working group to attract further US investment in Australian defence infrastructure, an issue Congress and the Trump administration have recently supported.

Second, the Trump administration’s increasingly zero-sum approach towards competition with China is likely to continue in a second term, unnerving Indo-Pacific allies and partners instead of building a unified position through policy compromise. This is particularly true in Southeast Asia where the United States’ divisive rhetoric on everything from technology competition and human rights to economic decoupling is creating friction with prospective balancers.[^36] To be sure, many Indo-Pacific countries privately welcome the administration’s tough stance on China, which they view as a clear-eyed antidote to Obama-era vacillation.[^37] But rather than building on this sentiment by offering stable and collaborative stewardship on China strategy, the administration has generally sought to force choices on issues like 5G and infrastructure without offering alternatives.[^38] This approach will continue to impede the development of collective strategy in the Indo-Pacific.

What Australia should do

Australia should continue to identify areas for China policy coordination that can build common ground between the United States and key regional partners. Although there are some encouraging signs in the administration’s approach to supporting Southeast Asian states in the South China Sea — where Washington has clarified its position on the illegality of Chinese claims — it is unclear if similarly well-coordinated initiatives are in train.[^39] Building on this year’s AUSMIN, US-Australian and regional efforts on health security, pandemic recovery, disinformation and cyber-resilience hold promise.[^40] Furthermore, Canberra should use the Pentagon’s global force posture review and bilateral posture working group to attract further US investment in Australian defence infrastructure, an issue Congress and the Trump administration have recently supported.[^41]

An Australian view of US policy toward China

Dr John Lee

Overview: The next administration will seek to find ways to apply further economic pressure on China and achieve greater ‘economic distance’ on US rather than Chinese terms.

Biden contrasts with Trump: Trump seeks the most robust coalitions of the willing to advance this agenda or continue to go it alone in many circumstances. In contrast, Biden wants support from as broad a group of advanced economies as possible.

What Australia should do

Regardless of who wins the election: The United States needs to reassert institutional and collective leadership. The key for Australia is not merely to participate in institutions but to compete through them and reshape them in accordance to Australian interests and values where possible.

During a Biden administration: Biden will want to explore institutional approaches to change Chinese behaviour or punish Beijing. Canberra should get in early to suggest approaches that have sensible institutional landing points, and which serve Australian interests and those of those economies that largely abide by international rules.

During a second Trump term, Australia should: Suggest economic offensive policies that have less market or price distorting effects, thereby lowering the unintended or collateral damage to other economies.

Long-term trends

President Trump has both rare achievements and failures when it comes to foreign policy. He has unsettled the nerves of US allies and friends. On the other hand, Trump has changed conversations, perceptions and, ultimately, policy — especially towards China — more than any other administration for generations. Whereas previous administrations dithered and demurred on this issue, Trump’s high tolerance for disruption, risk and antagonism has done more to alter Beijing’s calculations than any other president this century.

Balancing and countering China is now firmly entrenched as the centrepiece of US Indo-Pacific policy — as is the need to take risks to reverse negative trends or else modify Chinese behaviour and calculation. While many of Biden’s advisors have long been alert to the need for the United States to pursue a more proactive stance vis-à-vis China, Biden was slower to accept this call.

This is no longer true — no small thanks to Trump. Biden largely stakes his foreign policy credentials on who will have the more effective China policy. It is for this reason that this brief on the implications for Australia is framed around how the next administration will pursue Indo-Pacific policy, and China-policy, in particular.

Blue book

What changes under Biden

Biden’s team has put forward what they call advancing a favourable ‘competitive coexistence’ with China in strategic, political, economic, and technological contexts. As with all challenges, clues to their policy direction are found in the most ardent criticisms levelled against President Trump.

First, Biden argues that Trump has alienated or ignored allies. As a contrast, Biden considers that alliances offer the United States enduring and decisive advantages not enjoyed by China and promises to be more consultative with traditional allies and partners.

Biden considers that alliances offer the United States enduring and decisive advantages not enjoyed by China and promises to be more consultative with traditional allies and partners.

Second, and in addition to the off-putting framing of a Trump White House focused on ‘America First,' Biden believes that the United States is vacating international responsibilities and leadership by failing to understand the importance of preserving and exercising influence within institutions and regimes, such as the World Trade Organization (WTO), World Health Organization (WHO), and the East Asia Summit. Meanwhile, China has ramped up efforts to increase its presence and influence in regional and global institutions.

Third, Biden believes that Trump’s economic war against China was poorly thought through, reactionary and frequently self-defeating. Biden believes Trump’s approach has been distressing and disruptive for economic partners, having achieved only transient gains for the United States at best while creating further opportunities for China to exercise economic and institutional leadership.

Fourth, Biden believes the United States has ceded moral leadership through the president’s alleged disinterest in human rights, apparent affinity with authoritarian leaders, and disregard of transnational issues such as climate change. There is also the broader domestic criticism that Trump has poor respect for domestic institutions and laws which degrades the country’s moral standing in the world.

a. Personal dynamics and diplomacy with a Biden administration

Paradoxically, Trump’s unorthodox leadership style has worked to the Australian government’s advantage when it comes to attaining meaningful access to the White House relative to other allied and friendly governments. While most governments, such as those in Seoul and Singapore, continue to struggle to come to grips with the current administration, Canberra (and Tokyo) found a way to focus on the positive aspects of Trump’s preparedness to disrupt and take risks, and manage the negative aspects of these same presidential characteristics.

A Biden administration will be far more orthodox in style and process. This means that Canberra will again be competing with many other allied and friendly nations for privileged access and influence on an even playing field.

Moreover, Biden will gather an experienced group of principals and advisors around him who will be well-known to many officials in the region. Biden and his appointees will have well-developed policy views and are less likely to feel the need to seek guidance from Australia in the manner of the Trump administration when the latter came to power in 2017.

The downside is that it might be more difficult for Canberra to acquire and accumulate influence in Washington under Biden than it has been under Trump.

The US and China flags behind a microphone, Beijing
The US and China flags behind a microphone, Beijing
Getty Images

b. The danger of softer temperaments and the seeking of allied consensus

It is often the case that the greater obstacle to strategic ambition, courage, and resourcefulness on the part of allies such as Australia is less that US power is declining in relative terms than the doubting of American resolve and decisiveness. Australians welcomed Obama’s ‘pivot’ or ‘rebalance’ to Asia but lingering doubts about the then president’s determination and willingness to compete and confront sapped the courage of allies, causing the latter to largely hedge rather than balance or counter Chinese actions.

In an environment of deepening strategic competition with China, Biden’s more risk-averse and calmer (i.e., less disruptive) temperament and instincts might be a blessing but possibly a problem.

Furthermore, Trump’s abrasive treatment of allies and partners has been worrisome but has had the effect of persuading some of these, such as Australia and Japan to accept more responsibility and share of the security burden than a softer administration might have managed to coax. Indeed, those countries becoming more serious about countering China, like India, prefer a difficult but confrontational administration to an amicable but meek one. An administration with the latter characteristics is more likely to entice regional countries to hedge, free ride or remain on the sidelines rather than accept difficult and controversial burdens.

The momentum developed behind giving genuine substance to the Quad (between the United States, Japan, India and Australia), the trilateral cooperation between the United States, Japan and Australia in the Pacific, initiatives such as securing critical minerals, and aligning 5G and other technological policies are all controversial policies in China’s eyes and have been driven by the proactive countries in the Indo-Pacific.

It is a sensitive discussion regarding a Biden administration which makes much of the need to work with allies and partners and bring them along. It is a noble sentiment and gesture. But far more important than seeking the broadest possible agreement or consensus amongst allies and partners is the United States prioritising those prepared to absorb risks and do the heavy lifting — even at the risk of leaving others behind.

c. Competing for influence in institutions and crafting institutional responses and solutions

Trump’s poor understanding of the role of institutions in preserving and enhancing US power and influence and the importance of institutional solutions to problems to lock in gains (and defray risks or losses) is one of the most serious shortcomings in the president’s world view. Biden does not suffer that same ignorance and will be far superior to Trump in this regard.

Under Biden, there will be a high appetite for quickly crafting together a strategy to revive US presence and influence in key regional and global institutions. A Biden administration will want to outline: which institutions, why it is necessary, how to retake the initiative, and cooperation with allies such as Australia. Furthermore, Biden is far more likely to emphasise the importance of institutional outcomes to problems.

Climate change — walk and chew gum

In stark contrast to Trump, Biden’s emphasis will be on responding to climate change, domestically and internationally. Australia will have mixed feelings given the approach of the last Democratic president.

Under Biden, it is critical that the current Australian Government is as desperate as the Turnbull government was in 2017 in scrambling to lay the groundwork for access and influence in Washington before other countries attempt to do the same.

In prioritising a legacy producing global agreement on climate change — the Paris Climate Accord — Obama de-emphasised confrontation with China over strategic, economic, and human rights issues. That secured an agreement but was one which placed few burdens on Chinese carbon emissions, the largest emitter by a considerable margin. Obama’s wiliness to soften the US stance on other issues also seemed to embolden China to assertively pursue other objectives at America’s — and Australia’s — expense.

One suspects Canberra will also prefer that a Biden administration treat the lowering of carbon emissions as an economic and technological policy challenge — maintaining a practical agnosticism to global energy mix — rather than approach it as an ideological crusade to promote implausible renewable causes and proscribe even the highly efficient use of fossil fuels.

What Australia should do

It is important that the Australian Government not assume its familiarity with Biden and his appointees will equate to influence and access. Under Biden, it is critical that the current Australian Government is as desperate as the Turnbull government was in 2017 in scrambling to lay the groundwork for access and influence in Washington before other countries attempt to do the same.

Australia has accumulated standing in our willingness to give voice and/or action to fraught issues, such as China’s illegitimate gaming of the global economic system, the weaknesses of the WHO, and Beijing’s unhealthy sway over its leadership. A Biden administration will welcome Australian views of institutional solutions, including reforming the WHO and WTO or cobbling together an alternative regime in areas such as intellectual property protections, a renewed US influence in regional organisations such as the key ASEAN sponsored regimes. There will be an immediate and immense opportunity for Canberra to play an outsized role in setting the American institutional agenda in the early months of 2021.

The overwhelming evidence is that China will always prioritise its economic objectives over climate change responsibilities despite Beijing’s earnest rhetoric on the latter issue. Australia will do well to remind an incoming Biden administration of that reality.

Red book

What happens under Trump

By now, Australia is familiar with the opportunities and challenges of a Trump administration and making the best of it. This is not the same as being comfortable.

With respect to strategic objectives, military posture, and improving interoperability of US and allied forces, there is broad agreement and the ‘to do’ list is well established.

One area of high concern remains Trump’s economic offensive against China — this will undoubtedly accelerate in scope and depth under a second Trump term. The weaponisation of market access, capital denial, technology/know-how denial and even restrictions on US dollar transactions by Chinese entities will be expanded.

Trump’s high tolerance for disruption, risk and antagonism has done more to alter Beijing’s calculations than any other president this century.

Although Canberra agrees with many of the economic accusations levelled against China and the need for the United States to lead measures against Beijing’s activities, Trump’s approach generates high anxiety for these reasons:

  • The use of economic weapons and other forms of economic retaliation against China occurs with minimal consultation of or warning given to other countries. Similarly, Australia is largely in the dark about the intended pace and nature of escalation.
  • Economic punishment of and retaliation against China is seen largely as a bilateral issue to achieve a better outcome for the United States. Less thought is given to collateral damage inflicted on other economies and there is little interest in embedding outcomes that would benefit Australia and other economies.

What Australia should do

As a response, some priorities might include:

  • Improving key diplomat access in Washington DC: Australia’s formal and/or informal access to key individuals in the US Trade Representative agency and the White House’s Trade and Manufacturing Policy team is a little underdone given its excellent access in other areas and the outsized importance of these entities in driving US economic policy toward China.
  • Strengthening economic intelligence: Through improved access, Australia may be in a better position to understand the intended outcome of certain offensive economic policies against China — and be in a better position to assess whether Canberra should support it or remain on the sidelines. It might also give Canberra the opportunity to push for desirable institutional outcomes or landing points that the Trump administration could agree with.
  • Promote from a superior position: Australia might also be in a better position to suggest economic offensive policies that have less market or price distorting effects, thereby lowering the unintended or collateral damage to other economies. For example, the United States is accumulating a list of infringing Chinese firms which may be targeted by denying crucial technologies or restricting their participation in US dollar transactions. An additional categorisation of targeted firms should consider the extent to which sanctions against these firms would have secondary disruptive ramifications for non-Chinese firms, sectors, and regional supply chains. If the intention is to restrict the presence of Chinese firms in advanced markets, other additional categorisations could include the extent to which there are non-Chinese alternatives to that firm from trusted economies.

Finally, Trump’s disinterest in institutions is a serious problem for US leadership and power — and therefore a problem for Australia. Having said that, all voices should not be considered of equal value or weight. The danger of Trump de-emphasising multilateral institutions should not blind Australians to the perils of passively allowing these institutions (many of which are filled with entities hostile to US and Australian interests and values), shape or bind our important decisions.

The key is to convince the administration that the objective is not merely to participate in institutions but to compete through them and reshape them in accordance with our interests and values where possible. That pitch must be tailored to the administration, but the objective ought to remain the same.

An American view of US policy toward China

Dr Charles Edel

Overview: American attitudes toward China are hardening and Democrats and Republicans will support policies that enhance American competitiveness and push back on Beijing’s more concerning activities.

Biden contrasts with Trump: In a second Trump term, Trump will become more unilateral in his actions and less constrained in his impulses. A Biden administration will work to place allies and partners at the centre of US foreign policy.

What Australia should do

Regardless of who wins the election: Prepare for several policy adjustments from either electoral outcome. It should also prepare to discuss where Australia and the United States are moving in sync, where they are working at cross-purposes, and where joint efforts can expand productively.[^42]

During a Biden administration, Australia should: Prepare for the United States to return to international fora, emphasise values and human rights, and increase technological and economic policy coordination with allies. Australia should reinforce the administrations’ predilection for alliances by early demonstrations of support for the alliance.

During a second Trump term, Australia should: Continue identifying areas of shared interest with the US and then use existing mechanisms to pursue joint goals. Be prepared for a United States increasingly less committed to multilateralism and a White House disinterested in global leadership in defending democracy.

Long-term trends

The relationship between Washington and Beijing is increasingly characterised by competition across nearly every field — economic, military, technological, institutional and, even, ideological. Competition is unlikely to abate and will likely intensify as modifying factors — such as economic interdependence — become less significant drivers of the relationship.

There is a palpable sense of anger in the United States towards the Chinese Government. This has been growing for a while, but recent polling shows hardening attitudes toward China on most issues. Nearly three-quarters of Americans (73 per cent) now say they have an unfavourable view of China,[^43] and more than 60 per cent believe that the US should take steps to hold China accountable for its handling of the coronavirus and for exploiting US trade policies.[^44] And, while Democrats and Republicans express different levels of concern about China’s rise, majorities across party lines favour sanctioning Chinese officials for human rights abuses, prohibiting the sale of sensitive high-tech products to China, and prohibiting Chinese technology firms from building communication networks in the United States.[^45]

These attitudes will help support the belief that US policy needs to become more competitive towards China and further strengthen relationships with traditional allies. Recent actions by the Congress bear that out, with legislation moving forward to sanction Chinese officials for the government’s ongoing genocide in Xinjiang, strengthen the United States’ military capabilities in Asia, and significantly boost investment into research, development, and manufacturing of key technology.[^46] But, as much as popular attitudes and congressional legislation matter, presidential attitudes matter more in the creation of foreign policy. Both Trump and Biden support a sharper approach to dealing with Beijing, but the nature of US competition will shift considerably based on who is elected president in November.

Chinese President Xi Jinping answers questions during a press conference at the Great Hall of People in Beijing, November 2014
Chinese President Xi Jinping answers questions during a press conference at the Great Hall of People in Beijing, November 2014
Getty Images

Biden and Trump hold vastly different views on the United States’ role in the world and differ in their objectives, priorities, and preferred strategies. As such, the range of issues and the types of challenges for traditional allies like Australia will differ greatly based on the next occupant of the White House. Nevertheless, Canberra should be prepared for several policy adjustments from either a second Trump term or a first Biden term.

First, there will be significant turnover in the senior ranks of the US foreign policy establishment — either because of replacements in a second Trump term or new appointments in a Biden administration — and Canberra, therefore, should expect to encounter a significant number of new faces over the next several years.

Second, Canberra also should expect more focus on the US-Australia alliance, regardless of who wins. Under either Biden or Trump, there will continue to be intense US interest in Australia’s experiences dealing with foreign interference and economic coercion. There will also be a push for closer collaboration with Australia around technological innovation, supply chain diversification, and regional defence strategy. Canberra should prepare for discussions of where Australia and the United States are moving in sync, where they are working at cross-purposes, and where joint efforts can expand productively.[^47]

There will be significant turnover in the senior ranks of the US foreign policy establishment — either because of replacements in a second Trump term or new appointments in a Biden administration — and Canberra, therefore, should expect to encounter a significant number of new faces over the next several years.

In the context of the United States’ defence policy, Canberra can anticipate two trends — particularly as it relates to Asia. The first is that the balance of power in Asia will continue to tilt towards China in several important areas. The second is that the economic effects of the coronavirus pandemic will intensify downward pressure on the defence budgets of the United States and other nations. Taken together, Australia should anticipate shifts in US defence policy towards a more distributed, more lethal, and less conventional force structure. Such a shift, already underway, is likely to accelerate over the next several years, will carry implications for how the United States’ allies and partners think about, structure, place, and pay for their own armed forces.

Additionally, it seems clear that the further decoupling of the Chinese and American economies will take place under either a Biden or Trump administration, though the depth, breadth, and pace of decoupling will vary based on who is elected.

Finally, there may be some US-China cooperation on particular issues, though those issues will differ based on who occupies the White House and the composition of the new Congress.

Fundamentally, strategic competition between the United States and China will continue regardless of who is elected in November. However, there are a number of variables beyond the election that will also play a role in shaping US policy and the US approach, such as the new Congress, the willingness of allies (such as Australia and Japan) to shoulder a greater role in their own and regional defence, and perhaps most of all, China’s actions and responses to increasingly global concern about its activities.

Blue book

What changes under Biden

Under a Biden administration, a priority will be to reverse moves seen as harming US interests in Asia. Biden has made clear that as China has become more domestically repressive and externally aggressive, the United States will respond not by turning back the clock to an earlier era of engagement, but by better positioning the country to respond to the comprehensive set of challenges that China poses. This has both domestic and foreign policy components.

These will likely include a major shift in tone and rhetoric, a recommitment to multilateral engagement, a renewed focus on Southeast Asia, and a major push to place traditional allies at the centre of US foreign policy. While there will be a drive to identify limited areas of cooperation with China, a certain amount of decoupling of the Chinese and US economies will continue. China policy would likely become a subset of Asia policy and framed more around how best to defend and strengthen democratic institutions and governments than it would be around changing China. Human rights and democracy support would be high on the agenda, as would be boosting the budgets for diplomacy, aid, and development finance. There would be greater investments into technology, R&D, and education in order to ensure China does not surpass the US in cutting-edge technologies. In concrete terms, a Biden administration will likely focus on policies designed to secure technological advantage, strengthen economic resilience by building trusted supply chains, reinvigorate diplomacy, combat illiberal ideologies, promote an open information environment, enhance military deterrence, build greater asymmetric capabilities, and disperse US forces in Asia.

Under Biden, Canberra can expect outreach, discussion, and potential collaboration from Washington on export controls, screening of inbound foreign investment, technological standard-setting, and guidelines governing how research collaboration is overseen.

Within Democratic circles, there remain ongoing debates about trade policy, North Korea, and the size and shape of the defence budget. For all the areas of broad consensus among Democrats, there are also areas of disagreement, churn and ongoing debate. There is an ongoing debate between centrists and progressives that range across the board — from whether or not the United States should maintain military dominance (or, even presence) in Asia, to whether or not values and democracy support have a place in US foreign policy, to whether a more accommodationist approach would work with Xi Jinping’s China. There is debate about whether the primary competition between China and the United States resides primarily in the military realm or in the economic and ideational space, and subsequently which set of policies — and more importantly, budgetary allocation of resources — should receive priority. Finally, there is a broader debate not about whether to compete, but how to sequence competition and cooperation.[^48] That is, does competition from “situations of strength” require deferring more cooperative policies, or are certain crises — including those relating to global health, economic and climate change — so dire that competition needs to be moderated, or bypassed in these areas. Here, the debate is not over whether competition or cooperation are the better strategies for the United States, but rather how to compete smarter and in what sequence.

What Australia should do

A Biden administration will likely be more selective and strategic in its approach to decoupling with China. Selective decoupling is especially likely to concentrate around critical infrastructure and defence-related industries and research. As this occurs, Canberra can expect outreach, discussion, and potential collaboration from Washington on export controls, screening of inbound foreign investment, technological standard-setting, and guidelines governing how research collaboration is overseen.

Under Biden, the inclination for a more coordinated and multi-lateral response to China will likely replace unilateral and non-coordinated approaches, increasing the necessity of synchronising policy.

In areas of cooperation, a Biden administration will likely attempt to work with China on combating climate change and coordinating on global health challenges, especially in the wake of the coronavirus pandemic. Neither of these, however, are likely to come at the expense of investing in American competitiveness.

Australia should prepare for a return of the United States to international fora, greater emphasis on values and human rights, and an increased push for coordinating technological and economic policies between the United States and its allies. It should also prepare for climate policy to take on a much greater role in a Biden administration, Southeast Asia to occupy a more central focus in America’s Asia policy, and Washington to likely commit more resources to its diplomatic, aid and development budgets. Finally, Australia should reinforce a Biden’s administrations’ predilection for alliances by early demonstrations of support for the alliance.

Red book

What happens under Trump

In a second Trump term, the contradictions of US policy on China will become more pronounced. Trump’s antipathy towards coalition building at home and abroad, his consistent affinity towards authoritarian governments and silence on their human rights records, and his long-held belief that free trade and multilateralism are loser’s bets will not moderate. The Trump administration will remain focused on seeking an aggressive and multi-faceted set of policies, even if it continues to see internal divisions between those seeking economic engagement on more advantageous terms, those bent on further disentangling the US and Chinese economies, and those looking to thwart Beijing’s actions across the board. These internal divisions would mirror broader Republican debates over how to square industrial policy with free-market principles, disdain for international institutions with concern for ceding key fora, organisations, and venues to China, and how to balance trade and security.

More specifically, a second Trump term would likely see an uptick in symbolically aggressive actions, a push for further bifurcation of the internet and increased regulation of the tech industry, further limits on people-to-people exchanges (such as the withdrawal of the US Peace Corps from China)[^49] and making permanent the restrictions on certain Chinese students and scholars studying in the United States. The number of prosecutions of Chinese nationals accused of espionage by the Justice Department will likely increase, as will the number of Chinese companies and officials sanctioned for Beijing’s actions in Xinjiang and Hong Kong. There will also continue to be a big push for reshoring manufacturing in the United States, even as Southeast Asia — and not the United States — continues to reap the reward of economic decoupling, and calls for larger defence budgets while cutting funding for diplomacy, foreign aid, and economic development projects.

President Donald Trump talks to opera performers at the Forbidden City in Beijing, November 2017
President Donald Trump talks to opera performers at the Forbidden City in Beijing, November 2017
Getty Images

Looming over all of this would be the prospect of a temperamental Donald Trump. The Trump administration has presided over the largest shift in US policy towards China in four decades, but Trump himself seems the greatest variable in this equation, regularly praising Xi Jinping, asking the Chinese leader for help with his re-election, viewing Huawei and ZTE not as potential threats to information systems but as issues to make personal concessions to the Chinese, and endorsing China’s crackdowns in Hong Kong and Xinjiang. As John Bolton, Trump’s former National Security Advisor recently wrote, “The Trump presidency is not grounded in philosophy, grand strategy or policy. It is grounded in Trump. That is something to think about for those, especially China realists, who believe they know what he will do in a second term.”[^50] Trump has shown himself hawkish on China only in terms of trade and in deflecting blame for his handling of the coronavirus pandemic. Ultimately, Trump feels no compunction undermining his administration’s stated policies, as he has done repeatedly.

What Australia should do

Australia’s stock will rise because of the policy choices it has made, in relation to other Asian allies, such as Japan and South Korea, and due to reasons that matter more to Trump, such as a positive trade balance, than to anyone else.

On the diplomatic front, a second Trump term might result in closer US-Australian ties, but that would likely prove the exception rather than the model for US alliances, as Trump puts more pressure on South Korea and Japan and increasingly turns away from, and possibly abandons, NATO altogether.

Another Trump term will likely result in more abrupt decisions in the area of decoupling with China, with direct and overt pressure on businesses to fall in line. With that said, there is also the distinct possibility that he will seek another trade deal with Beijing, since the one signed in January 2020 failed to curb China’s subsidies to its state-owned enterprises, did not halt rampant intellectual property theft of US businesses and technology, and did not result in increased Chinese purchases of American goods.

Australia will need to continue identifying areas of shared interest with the United States, and then use existing mechanisms and bilateral fora to pursue joint goals. Australia will also need to be prepared for a United States less committed to multilateralism and a White House that will not play a leading role in defending democracy around the world.

US foreign policy in Europe and the Middle east

Dr Gorana Grgic and Jared Mondschein

Overview: With the exception of China, the pressure for the US government to focus on domestic concerns — and not European or Middle Eastern issues — will likely be greater than any other post-Cold War presidency.

Biden contrasts with Trump: The Biden approach to foreign policy will prioritise restoring alliances, resuscitating multilateralism, promoting human rights, and confronting foreign dictators. President Trump’s foreign policy in Europe and the Middle East will remain unconventional and unpredictable.

What Australia should do

  • Regardless of who wins the election: Burden-sharing and maintaining an active presence across all halls of power in Washington will continue to be paramount for US allies like Australia, particularly when the US focus will be increasingly dominated by domestic challenges.
  • During a Biden administration, Australia should: Continue efforts in support of burden-sharing and the rules-based international system — including maintaining a robust defence strategy and expanding the revamped Trans-Pacific Partnership.
  • During a second Trump term, Australia should: Maintain an assertive voice alongside the rest of the Washington establishment in underlining the strategic importance of the Indo-Pacific.

Long-term trends

Since the end of the Cold War, every US presidential election has featured candidates pledging to do less in foreign policy. Donald Trump in 2016 and Barack Obama in 2008 both criticised US involvement in Middle Eastern wars and pledged to withdraw US troops from the region. George W Bush in 2000 argued that the United States was “no longer fighting a great enemy” and emphasised that the United States “refused the crown of an empire." Bill Clinton told the public in 1992 that “foreign policy is not what I came here to do."

While each US president has subsequently faced criticism for overzealous foreign policy, the pressure on the president who is inaugurated in 2021 to focus on domestic concerns will arguably be greater than it was for any other post-Cold War presidency. These concerns include nationwide civil unrest, an economic recession, and a pandemic that has killed more than 200,000 Americans.

Barring unforeseen events, the one exception to this inward gaze will be China. Contrary to prior elections, both candidates are campaigning on who will do more on this specific foreign policy challenge. Issues in Europe and the Middle East, meanwhile, remain in the background to most Americans — largely seen as a distraction from more pressing issues.

In Europe, Americans will likely remain largely opposed to Russian aggression and in favour of maintaining alliances but with a strong emphasis on allied burden-sharing, which has bipartisan support in the Congress. And in the Middle East, the three drivers of recent US engagement in the region — combating terrorism, securing access to oil, and defending Israel — are simply not urgent priorities. Today, terrorism ranks last in a list of issues that Americans deem to be a “very big problem in the country today," the United States has largely secured energy independence, and Israel is enjoying unprecedented support from Arab nations and, therefore, fewer threats to its existence.

US foreign policy in Europe and the Middle East will continue to be dominated by the challenges presented by China at a level not dissimilar from the Soviet challenge in the Cold War.

Yet, the unfortunate reality is that the most successful strategy for confronting Beijing will require collective action in tandem with allies and partners. A US foreign policy solely focused on China alone will likely lead to less success because unilateral efforts weaken the US ability to confront Beijing.

The United States will maintain an Indo-Pacific Strategy (though perhaps branded differently) and China will remain the central challenge of that strategy. The United States will also continue to seek support of such efforts with allies and partners in Europe and the Middle East but, again, the challenge for US allies and partners is that practically all US foreign policy will be coloured by pressing domestic concerns and strategic competition with China, including seemingly unrelated developments.

US foreign policy in Europe and the Middle East will continue to be dominated by the challenges presented by China at a level not dissimilar from the Soviet challenge in the Cold War. This preoccupation with China will continue to feature in everything from international trade and defence agreements — as evidenced in the new US-Mexico-Canada Free Trade Agreement, which includes language targeting China — to domestic economic activities related to critical supply chains.

As much as domestic concerns and China will colour the focus of US foreign policy, the nature of how it is carried out will remain less inhibited. It should not be forgotten that it was the intractable nature of the United States’ challenges at home and abroad that, in many ways, fuelled Donald Trump’s candidacy. Many Americans concluded that the conventional approach had not achieved desired results so it was worth considering a new approach.

From slapping blanket tariffs on US allies, questioning the utility of NATO and moving the US embassy in Israel to assassinating an Iranian general, this unconventional approach to foreign policy has largely not been perceived by the US public to have resulted in the sort of catastrophe that many experts predicted. This has helped widen US foreign policy’s “Overton window,” or the spectrum of ideas considered palatable by the public.

In either electoral outcome, the American public will expect fewer losses of American lives and less money spent overseas in Europe and the Middle East. They will simultaneously tolerate more unconventionality in the execution of foreign policy than prior presidents employed, or even considered employing.

Blue book

What changes under Biden

The Biden approach to foreign policy will prioritise restoring alliances, the promotion of human rights, and confronting — instead of revering — foreign dictators. Multilateralism rather than unilateralism will be the default stance of a Biden administration, with a concerted push to resuscitate international organisations and deals that have been defanged and rolled back under President Trump — ranging from the World Trade Organization (WTO) and World Health Organization (WHO) to the Paris Climate Accord and Iran Nuclear Deal (Iran Deal).

These efforts will be acutely articulated in the Biden administration’s Summit for Democracy, a meeting of democratic nations to occur in the first year of Biden’s term of office. This gathering would, in Biden’s words, “renew the spirit and shared purpose of the nations of the free world.”

But after the summit, after the increase in rhetorical support for old allies and partners, and after the quick reversals of the Trump administration’s executive orders, the many foreign policy challenges facing the United States will not miraculously disappear. If anything, the problems will likely become more glaring because there will be less media distractions than was customary in the Trump administration.

Europe

Biden has surrounded himself with a team deeply committed to patching up relations with Europe[^51] given they are, at this point, at their post-Cold War nadir. More attention and assurances given to NATO and US-European Union relations can be expected.

Biden has also professed he will be much tougher on Russia — particularly on issues like election interference in the United States and hybrid warfare against US allies — since he views Putin’s regime as an adversary.[^52] At the same time, the administration will be pressed to find the right balance in sanctioning Russia for electoral interference and sabotage as it needs to avoid pushing it further into alignment with China.[^53]

Overall, a Biden presidency offers prospects of much greater coordination with European counterparts on China — both on trade and security fronts. Yet Europeans remain far from unified in their stance on China.[^54] While various initiatives that will foster greater coordination and collaboration on China policy are coming from both executive and legislative levels in the transatlantic space, it is hard to envisage a united front that would encompass most of the European continent in the near term.

NATO's forecourt sculpture, also known as the 'NATO Star,' is pictured at the NATO headquarters, April 2018
NATO's forecourt sculpture, also known as the 'NATO Star,' is pictured at the NATO headquarters, April 2018
Getty Images

In this context, cooperation on trade matters will be one of the policy areas where there will be an early opportunity to develop a more unified front towards China, along with the added benefit of mending relationships damaged by Trump’s tariffs on European allies. A more ambitious undertaking, such as reviving the Transatlantic Trade and Investment Partnership Agreement (TTIP) negotiations, seems to be more far-fetched at the moment as Biden campaigned on a “made in America” platform.[^55] Moreover, given treaty negotiations are approved by Congress, much will also depend on its ideological makeup. It is equally to be expected the United Kingdom will be actively lobbying for a trade deal with the new administration in the post-Brexit era, although this has not been set as a priority by Biden.

Given candidate Biden’s climate and energy policy platform, Australia might find itself pitted against the transatlantic agenda on green recovery. This is an area where Biden’s cooperation will pick up from where President Obama left, committing even further to work in the context of EU-US Energy Council or the more recently founded Alliance for Multilateralism.[^56]

The Middle East

The combination of a strategic clarity resulting from fewer urgent issues being present in the region, the more limited domestic political value of the region to the Biden administration, and the more pressing concerns elsewhere will mean the region will garner considerably less attention from the Biden administration.

A Biden administration may seek to resurrect the Iran Deal, prioritise human rights in bilateral efforts with nations like Saudi Arabia, and rhetorically push back against Israeli annexation in the West Bank, but these efforts will not be top priorities — particularly in a first term.

A Biden administration may seek to resurrect the Iran Deal, prioritise human rights in bilateral efforts with nations like Saudi Arabia, and rhetorically push back against Israeli annexation in the West Bank, but these efforts will not be top priorities — particularly in a first term.

There will be some notable consistencies with the Trump administration on some key issues, including maintaining both strong support of Israel and a deeply felt scepticism of committing further US troops to the Middle East. And, having previously called himself a Zionist, Biden has also pledged to keep the US embassy in Jerusalem.

What Australia should do

While the rhetoric of the Biden administration will be a vast departure from the Trump administration, many of the key values — particularly urging allies and partners to do more burden-sharing and support efforts to maintain a rules-based international system — will go unchanged from the Trump administration.

As a result, Australia should continue its efforts in support of these values — whether that be through maintaining a robust defence strategy or expanding the revamped Trans-Pacific Partnership. This could also include segmented and issue-specific responses which Australia should take part in or further step up its involvement, as is the case with the Inter-Parliamentary Alliance on China.[^57]

Australian efforts on these fronts would be welcomed by the Biden administration despite the fact that a more progressive US administration may decrease support for US military budget expenditures and US participation in foreign trade agreements.

Red book

What happens under Trump

President Trump has defied a lot of presidential history orthodoxy but he will likely follow at least one convention: In their second term and facing an oppositional Congress, post-Cold War presidents have tended to pursue a more active foreign policy and engage in legacy building. After all, it was in the second term of the Clinton, Bush, and Obama administrations that many of their most ambitious international efforts occurred.

With that said, few aspects of President Trump’s foreign policy in Europe and the Middle East will be conventional in a second term.

Europe

It is clear that President Trump has seriously considered withdrawing from NATO. The odds of him acting on his instincts are higher in a second term. While Congress has already built-in checks against this by linking it to appropriations in the 2020 National Defense Authorization Act,[^58] the credibility of the administration’s commitment to any of its allies will be immediately brought into question. Moreover, it will make it challenging to coordinate with European counterparts on any other security issues, such as China.

German Chancellor Angela Merkel deliberates with US president Donald Trump on the sidelines of the G7 summit in Charlevoix, Canada, June 2018
German Chancellor Angela Merkel deliberates with US president Donald Trump on the sidelines of the G7 summit in Charlevoix, Canada, June 2018
Getty Images

Protectionist measures are likely to be used as bargaining chips in trade negotiations with Europe. The prospects of coming to a comprehensive trade agreement with the European Union are extremely slim. However, it is reasonable to believe that a US-UK free trade agreement will be one of the foreign policy achievements of Trump’s second term.

The Trump administration will not give up on its ‘energy dominance’[^59] agenda in the second term. President Trump will likely want to fuel the post-pandemic economic recovery relying on shale oil and gas, including increasing energy exports to Europe.[^60] These efforts will also be extended across Asia and potentially compete with Australian energy exports.

The Middle East

The Trump administration’s actions in the Middle East in the first term should not be minimised. Eliminating a top Iranian general, securing more Arab recognition of Israel, and crippling the Iranian economy with sanctions while not suffering from the blowback that many experts predicted are no small feats whatsoever.

There is strategic clarity from the fact that the key reasons for US engagement in the region — combating terrorism, securing access to oil, and defending Israel — are no longer as urgent. Despite the bulk of the Trump administration’s strategy in the region stemming from exerting maximum pressure on Iran, its approach to the region remains unpredictable and consistent with the view that symbolic, tactical wins in the region remain politically popular in the United States and with the Republican base. Such unpredictability can alienate allies just as much as it can keep adversaries off-balance — particularly because tactical Trump administration wins in the Middle East may divert attention from the more strategically consequential Indo-Pacific.

What Australia should do

Over a second term for the Trump administration, Australia ought to continue to prioritise the development and execution of more extensive and robust policies focused on the Indo-Pacific. This task will need to be carried out while mitigating the destabilising and ephemeral impulses of a US president whose administration developed the US Indo-Pacific strategy but who is, at an individual level, not strategic.

Australia should leverage its uniquely healthy alliance with the United States to advocate for the strategic importance of the Indo-Pacific over European and Middle Eastern issues of lesser strategic importance.

COVID-19

Associate Professor Adam Kamradt-Scott

Overview: One or multiple coronavirus vaccines may be forthcoming, but they will be in short supply for at least the first 12 months of production while industrial manufacturing capacity is scaled up globally to meet demand.

Biden contrasts with Trump: A second Trump administration will likely maintain isolationist policies that disadvantage coordinated international responses to the pandemic. A Biden administration will likely reverse funding cuts and potentially donate additional funds and political support to the World Health Organization.

What Australia should do

  • Regardless of who wins the election: Australia must seek out and pursue opportunities that engage the United States in multilateral and/or bilateral efforts to contain COVID-19, which will be critical to restarting the global economy.
  • During a Biden administration, Australia should: Encourage the United States to join the COVAX initiative immediately after the former vice president assumes office.
  • During a second Trump term, Australia should: Continue to emphasise the strong strategic partnership that the United States and Australia have enjoyed over the past 70 years, expanding on existing collaboration and seeking out new opportunities.

Long-term trends

Irrespective of the election outcome, the SARS-CoV-2 virus that is responsible for the COVID-19 pandemic will continue to infect and kill people. Tragically, the United States remains one of the worst-affected countries, with more than eight million cases and 220,000 deaths recorded to date. Although there are promising signs an effective vaccine or series of vaccines may soon be approved for widespread use, any vaccines will be in short supply for at least the first 12 months of its existence while global manufacturing capacity is scaled up to meet demand. Further, in September 2020, the United States also confirmed that it would not join the COVID-19 Global Access (COVAX) initiative — a multilateral agreement designed to make two billion doses of vaccines globally available by the end of 2021. This means that the United States has locked itself out of one pathway to accessing vaccines as soon as they become available.

Vaccine supply is just one of the United States’ challenges ahead though. A significant proportion of the US population has indicated they would refuse to be vaccinated even when a vaccine becomes available. In June 2020, polls suggested that as many as 50 per cent of Americans would refuse a COVID-19 vaccine.[^61] While a Gallup Poll conducted in August suggested approximately 35 per cent of Americans would decline vaccination,[^62] the results still suggest that vaccine hesitancy will remain a pervasive problem. This has implications for the reopening of the US economy as well as the willingness of other countries to permit not only their citizens to travel to the United States, but also for Americans to travel internationally.

Blue book

What changes under Biden

Biden’s campaign outlined a series of measures it pledged to implement upon taking office. Biden has, for example, promised to immediately reverse the Trump administration’s decision to withdraw the United States from the World Health Organization (WHO).[^63] This would permit the United States to re-engage with the global health agency, including attending the Executive Board meeting that is scheduled to occur the week of the inauguration. A Biden administration will likely reverse the associated planned funding cuts to WHO, potentially donate additional funds, and add political support to the agency’s efforts coordinating the international response to the COVID-19 pandemic.

Wearing a face mask to reduce the risk posed by the coronavirus, Democratic presidential nominee Joe Biden speaks with reporters in Delaware, October 2020
Wearing a face mask to reduce the risk posed by the coronavirus, Democratic presidential nominee Joe Biden speaks with reporters in Delaware, October 2020
Getty Images

It is anticipated a Biden administration will represent a return to the United States’ leadership in global health that is characterised by working constructively through multilateral agencies. It is also possible a Biden administration will request to join the COVAX initiative, although it is unclear whether this would be approved given any request from the United States could only be issued after the inauguration, some four months after the deadline to join passed. From a domestic perspective, this would increase the United States’ options for accessing internationally developed COVID-19 vaccines and provide an additional guarantee of supply beyond the domestic efforts already underway. It would also serve as a strong signal of renewed US leadership and a commitment to working collaboratively via multilateral initiatives, particularly given that China recently joined COVAX,[^64] in part because the United States did not.

Biden has also committed to establishing the White House National Security Council Directorate for Global Health Security and Biodefense,[^65] as well as re-establishing and enhancing the US Agency for International Development’s pathogen-tracking program PREDICT[^66] — both of which were abolished by the Trump administration. Such pledges indicate that in the Biden administration, the United States will re-engage with international partners to strengthen not only the international response to the COVID-19 pandemic but, also, to fortify programs and multilateral arrangements entrusted with detecting and responding to future health security threats. In this respect, a Biden administration represents a return to the United States’ stable, reliable support for global health security initiatives and institutions, which would provide a measure of reassurance to allies like Australia.

What Australia should do

Given the level and extent of COVID-19 infections currently throughout the United States, it must be acknowledged that the United States’ containment of the SARS-CoV-2 virus is also essential to global economic recovery, so Australia’s interests are again served by assisting the United States’ domestic efforts to eliminate the virus. Beyond this, however, the United States can continue to provide significant moral and political leadership in the wider international context, and Australia should seek to support a Biden administration in realising that role.

Australia could work with the United States to make COVID-19 vaccines available both via the COVAX initiative as well as on a bilateral basis to countries in need, creating new opportunities for Australia-US cooperation and regional leadership.

For Australia, the United States’ re-engagement with the WHO will be a welcome development. Although the Australian Government has acknowledged there are elements of the WHO in need of further improvement, the organisation continues to serve an important role in global health and particularly outbreak response given the creation of the new WHO Health Emergencies Programme (WHE) in 2016.[^67] With a Biden administration, one potential option would be for Australia to support the United States in calling for an exceptional UN General Assembly to agree on a firm set of reform proposals to the WHO, which would be essential for securing diplomatic endorsement from other WHO Member States. Central to any future reforms must be a discussion around the funding arrangements for the organisation, and, in particular, the current level of assessed contributions that are universally acknowledged to be insufficient for the WHO’s operational expectations. Given that the United States was instrumental in freezing the assessed contributions of United Nations agencies in the 1980s[^68] — which culminated in other governments following the United States’ direction — the United States’ leadership in addressing the current financial situation is critical to successfully reforming the global health agency to ensure it is fit for purpose.

A similar approach is arguably required with respect to the international response to COVID-19. Australia should be on the lookout for opportunities to support and encourage a Biden administration in this area. For example, Australia could encourage the United States to join the COVAX initiative immediately upon taking office. The United States could also be encouraged to use its diplomatic weight to encourage entities like the World Bank and Asian Development Bank to help fund additional COVID-19 vaccine supplies for low and middle-income countries throughout the Indo-Pacific region that currently lack domestic manufacturing capacity. At the same time, Australia could work with the United States to make COVID-19 vaccines available both via the COVAX initiative as well as on a bilateral basis to countries in need, creating new opportunities for Australia-US cooperation and regional leadership. Accompanying these measures, a bilateral meeting between the Indo-Pacific Centre for Health Security and the re-established White House Global Health Security office would provide an opportunity to identify further opportunities for Australia-US collaboration.

Red book

What happens under Trump

With respect to the pandemic and the United States’ engagement with global health initiatives more broadly, it is likely the Trump administration will continue in much the same direction in its second term as it did in the first. Specifically, it is widely believed the president’s criticism of the World Health Organization (WHO) — which was followed by his decision to withdraw the United States from the global health agency — has been largely aimed at shifting blame and/or changing the narrative surrounding the president’s mismanagement of the crisis. In a second term, Trump is likely to realise his plan to withdraw the United States from the WHO. Although the president has indicated the United States would repurpose the funding currently allocated to supporting WHO to fund global health efforts on a bilateral basis or via alternative institutions,[^69] the president’s decision will quite possibly result in a raft of cancellations of WHO-led programs and initiatives. The WHO programs previously supported by the United States include polio eradication, HIV/AIDS, tuberculosis, maternal health and outbreak response — to name a few.[^70] These programs are now at risk. The cancellation of such initiatives would not be in Australia’s immediate or long-term interests. Correspondingly, there is a need to engage with a second Trump administration on this issue.

Although President Trump has indicated the United States would repurpose the funding currently allocated to supporting the World Health Organization fund global health efforts on a bilateral basis or via alternative institutions, the president’s decision will quite possibly result in a raft of cancellations of World Health Organization-led programs and initiatives.

In anticipation of the United States’ withdrawal from the WHO, the Trump administration has proposed the creation of a new ‘President’s Response to Outbreaks’ (PRO) initiative.[^71] The proposal, which is reportedly modelled on the highly successful President’s Emergency Plan for AIDS Relief (PEPFAR) launched by former President George W Bush,[^72] comprises two elements: an ‘America’s Response to Outbreaks’ (ARO) program to increase domestic capacity to respond to disease events, and a Preparedness Initiative for Pandemics and Emergency Response operated by the US State Department to help fight pandemics overseas.[^73] The PRO would fulfil the president’s commitment to using funds currently earmarked for the WHO to continue to support global health, but it would also reinforce the Trump administration’s disdain for multilateralism. Given Australia continues to support WHO and multilateral efforts for addressing global health issues, and that the global health system is already suffering from a proliferation of actors leading to duplication of effort and fierce competition for resources, supporting the creation of the PRO would not serve Australia’s interests.

With respect to efforts to contain the COVID-19 pandemic, the United States will adhere to an ‘America First’ approach regarding COVID-19 vaccines.[^74] It is also likely that a second Trump administration will follow policies that conceivably place Australia and like-minded countries at a disadvantage when pursuing a coordinated international response to the current pandemic. For instance, in addition to developing a vaccine by the end of 2020 with the stated aim of permitting a “return to normal in 2021,"[^75] the Trump administration has declared a second-term priority will be making critical medicines and supplies for healthcare workers in the United States and stockpiling supplies to prepare for future pandemics.[^76] While policies designed to protect Americans are to be expected, it is also the case that clear, consistent and dependable partners will be essential to seeing COVID-19 contained. Unfortunately, the behaviour exhibited by the Trump administration to date has not been that of a reliable strategic partner.

What Australia should do

Australia could play a very important role in helping keep the United States engaged in global health efforts, potentially including WHO. This would not be the first time Australia played such a role with the Trump administration. For example, through senior-level discussions with the Trump administration and the launch of its own A$300 million Regional Health Security initiative, Australia was able to help persuade the White House to renew a five-year term of funding for the Global Health Security Agenda (GHSA), an entity created during the Obama administration to support low-income countries meet their commitments under the International Health Regulations (2005).[^77]

Given senior Australian government ministers have reaffirmed their own support for the WHO, and that several members of the US Congress have done likewise, it is conceivable the Australian Government could play an important and constructive role in helping keep the United States engaged in global health efforts throughout a second Trump administration by its own ongoing support for the WHO and the agency’s coordination of the COVID-19 response.

Australia could play a very important role in helping keep the United States engaged in global health efforts, potentially including the World Health Organization. This would not be the first time Australia played such a role with the Trump administration.

As part of that effort, Australia’s Regional Health Security Initiative, launched by former Foreign Affairs Minister Julie Bishop in October 2017, will continue to play an important role. This A$300 million initiative has proven extremely valuable in raising Australia’s profile and commitment to regional and global health security. The Indo-Pacific Centre for Health Security (CHS) that was created as part of the initiative has served to facilitate new region-wide cooperation even prior to the pandemic. CHS is continuing to help in coordinating regional assistance, but the initiative is currently due to conclude in June 2022. Given that it is likely the effects of the pandemic will extend beyond the initiative’s current funding cycle, it would be in Australia’s immediate and medium-term interests to capitalise on the investment to date and expand the current initiative to focus on increasing preparedness — a priority that is also shared by the Trump administration — for another five years (2022-2027) with a comparable investment to the first tranche of funding (i.e. A$300 million or more).

Australia is well-placed through existing regional collaborations at senior official and technical levels to ensure that collaboration in health security matters continues. This is perhaps most clearly articulated by the recent AUSMIN Global Health Security statement, which outlines a number of initiatives already underway.[^78] Australian Government officials would be best placed to continue to emphasise the strong strategic partnership that the United States and Australia have enjoyed over the past 70 years, expanding on existing collaboration (e.g., INDOPACOM-ADF Military Health Security Summit) while also seeking out new opportunities. In short, Australia could utilise the Regional Health Security initiative to engage the United States in various mutually-beneficial programs and initiatives, and in so doing, demonstrate both countries’ continued leadership while also reducing opportunities for other state actors to exert influence across the region.

Climate change

Professor Simon Jackman and Jared Mondschein

Overview: The economic downturn may temporarily dampen US environmental ambitions but the number of Americans who believe in climate change is likely to continue to increase in the long term, regardless of who occupies the White House.

Biden contrasts with Trump: Under a Biden administration, Australia is likely to face pressure from the United States on its climate change agenda. Under a second Trump term, Australia may face US pressure on energy exports, but not climate change.

What Australia should do

  • Regardless of who wins the election: Australia should recognise that as much as the Trump administration has remained unchanged on climate change, attitudes on the subject are polarised across the United States, but not stagnant.
  • During a Biden administration, Australia should: Recognise that climate change will feature prominently in US foreign policy. It should also support Australian industry seeking a role in the significant environmental investments expected to be made by the Biden administration.
  • During a second Trump term, Australia should: Emphasise opportunities for collaboration on energy exports and be prepared for a significantly different message from the United States on climate change under a future administration.

Long-term trends

Americans have never cared more about protecting the environment and dealing with climate change. As the global financial crisis fades into historical memory, and the US economy has grown stronger, the environment and climate change have become more important priorities for many Americans. In 2009, 41 per cent of Americans said protecting the environment should be a “top priority for the president and Congress." By 2020, that figure had increased to 64 per cent. It is similar for “dealing with global climate change," with the corresponding figures increasing 30 per cent in 2009 and 52 per cent in 2020.[^79]

This change in public opinion is not uniform across partisan groups in the United States. Like so many issues, there is a wide partisan gulf on the importance of climate change and the environment. In 2020, 85 per cent of Democrats said that protecting the environment should be a “top priority for the president and Congress," an increase from 65 per cent in 2008. For Republicans, 39 per cent in 2020 prioritised the protection of the environment — no change from 38 per cent in 2008.[^80]

Regardless of who is in power in Canberra or Washington, tension over climate change can be expected between the two allies so long as the respective governments sit on opposite ends of the political spectrum.

Federalism, divided government, and scepticism about state power, bureaucracy and regulation predispose the United States to be an international laggard on climate change, irrespective of the party of the president. Expectations about how far or how quickly the United States will move on climate change policy should be tempered under any scenario about the election outcome; at the same time, the long term evolution of American public opinion on this issue will continue.

In the short term, however, this may change given the inverse correlation between economic and environmental concerns. The dramatic global economic downturn will likely force even the most ambitious environmental activists to recognise that climate change policy will be second to the more immediate economic recovery.

It should be noted that Australian views of climate change are not too dissimilar from US views. In 2019, 77 per cent of Australians and 68 per cent of Australians said climate change was occurring.[^81] When asked in 2020 about whether “global climate change is a major threat” to their respective country, Australians ranked last in a group of 14 developed nations, with only 59 per cent agreeing, compared to 62 per cent of Americans and 71 per cent of UK citizens.[^82]

Regardless of who is in power in Canberra or Washington, tension over climate change can be expected between the two allies so long as the respective governments sit on opposite ends of the political spectrum. A progressive Australian government, for example, would likely take issue with the Trump administration’s handling of climate change. Centre-right Australian governments could well find themselves at odds with a Biden administration in some elements of climate change policy, especially as they intersect US policy on trade, investment, and elements of defence and foreign policy.

Blue book

What changes under Biden

An election win for Joe Biden will mark the return of substantial US action on climate change domestically and on the international stage.

A Biden administration will be under intense pressure to see that promises for climate change policy responses are carried out. Seeking to avoid the tumult of the 2016 post-primary Democratic division, a large part of the party unification effort conducted by the Biden campaign has included bringing the Bernie Sanders wing of the party to the table on climate policy. As such, the platform the “moderate” Joe Biden brought to the 2020 election includes bold and progressive climate ambitions. These include a promise to put the United States on track for net-zero carbon emissions by 2050 and a target to decarbonise the US electricity sector by 2035. These are to be supported by massive investments in clean energy technologies and infrastructure. Biden has also committed to returning the United States to international climate change fora including the Paris Climate Accord.

US Representative Alexandria Ocasio-Cortez speaks during a press conference to announce Green New Deal legislation outside the US Capitol, February 2019
US Representative Alexandria Ocasio-Cortez speaks during a press conference to announce Green New Deal legislation outside the US Capitol, February 2019
Getty Images

Joe Biden himself is reluctant to compare his plan with the so-called Green New Deal, but it is similar in principle. Biden’s plan seeks US$1.7 trillion in investments in green technologies over ten years geared towards job creation and infrastructure. With these commitments, it is clear a Biden administration is not aiming to pick up where the Obama administration left off, but to make up for the time lost during the Trump presidency.

Ultimately, the scale of any Biden climate change policy suite will depend on whether Democrats also take the US Senate. Absent Democratic control of the Senate, Biden’s ability to move on climate will be limited to executive orders and regulations, all of which will be subject to legal challenges as well as quick overturns should another climate sceptic take office after him. Nonetheless, the ability to inject climate change considerations into security and trade policy overseas lies more squarely in the purview of the executive branch, with tremendous scope for rule-making and regulations.

This will mean a sharper stick abroad. Biden has pledged to put pressure on other countries to adopt more ambitious targets through American economic leverage and the integration of climate change initiatives into security and trade policy. Jake Sullivan, a senior Biden advisor has said that these pressures would be exerted on competitors like China and friends like Australia.[^83] This will introduce a new point of tension in the alliance as neither major party in Australia has committed to targets as ambitious as Biden’s.

Australian firms and industry could be massively impacted by US regulated international investments in energy-producing or carbon-emitting industries and firms, mandated carbon offsets, preferred supplier rules or even carbon-based tariffs. Biden’s proclivity for collective action on the world stage will leave little room for Australia to seek concessions from broad trade policy on this front, as it has been able to do with Trump tariffs.

Biden has pledged to put pressure on other countries to adopt more ambitious targets through American economic leverage and the integration of climate change initiatives into security and trade policy. This will introduce a new point of tension in the alliance as neither major party in Australia has committed to targets as ambitious as Biden’s.

Accordingly, climate change policy could well become a domain in which the United States — at least in appearance, if not in law and policy — vaults from being more sceptical of targets and international agreements than the Australian government to precisely the opposite. If Biden is elected, this is a policy domain that will warrant close and constant attention, a potentially new dimension of the US-Australia relationship presenting many opportunities and challenges.

What Australia should do

Australian firms that position themselves correctly stand to benefit greatly from these investments. And while at a vastly greater scale, there are many points of connection here with the technology roadmap recently announced by the Australian government. Hence there is a compelling Australian national interest in partnering with myriad US entities like grant-making bodies, universities, investors, companies, and entrepreneurs.

But outside of industry, the Australian government will need to prepare for the likelihood of increased international pressure, including from the United States, to commit to more serious emissions reductions ahead of the next round of UN climate talks scheduled to occur in Glasgow in November 2021.

Red book

What happens under Trump

President Trump has begun the process of removing the United States from the Paris Climate Accord and removed federal environmental regulations on air, water, wildlife and toxic chemicals. So far, some 77 environmental rules and regulations have been reversed by the Trump administration while another 27 are still in progress.[^84]

In speeches and remarks, President Trump asserts that clean air and clean water are equivalent to a wholly healthy environment. There’s no indication that he will broaden his climate ambitions beyond these areas.

The most pronounced agenda shown by the Trump administration has been to cut back Obama administration environmental initiatives. From rollbacks of emissions standards on automobiles and power plants to the removal of wildlife protections, most of the de-regulation has targeted Environmental Protection Agency standards implemented by the Obama administration seen by the Trump administration to be limiting economic growth. A second term for the Trump administration will continue in this fashion, including further deregulation and environmental rollbacks as well as disinterest in international climate talks.

The economic downturn resulting from the global pandemic will likely be used as a further reason for accelerating the removal of environmental protections.

it is unlikely that another four years of a Trump administration will halt the ongoing evolution of US public opinion in favour of climate change mitigation efforts.

The same reason may be given for escalating efforts to increase US exports of natural gas, which already doubled between 2016 and 2019. Given the fact that the Trump administration championed US energy production for lowering the US trade deficit, increasing US energy security, and decreasing home energy bills, it is likely that the Trump administration in a second term will double down on seeking new overseas markets for US energy exports.

What Australia should do

On climate change, Australia should not forget that the majority of Americans believe in it and support efforts to mitigate against it. It is also unlikely that another four years of a Trump administration will halt the ongoing evolution of US public opinion in favour of mitigation efforts.

Trade policy

Dr Stephen Kirchner

Overview: US policy will have a greater focus on national resilience and economic self-sufficiency through a greater fusion of trade, investment and industrial policy and national security concerns.

Biden contrasts with Trump: A Biden administration will have a greater focus on multilateralism and multilateral institutions and coalition-building among allies, including Australia, to tackle strategic economic competition with China, in contrast to the Trump administration’s more confrontational approach.

What Australia should do

  • Regardless of who wins the election: Australia should work to ensure that the United States remains economically engaged internationally and does not adopt trade and industrial policies that are protectionist and damaging to the world economy rather than addressing legitimate national security concerns.
  • During a Biden administration, Australia should: Seek to facilitate economic re-engagement by the United States in the Indo-Pacific region in conjunction with other alliance partners and help bridge the gap between the United States and European Union on World Trade Organization reform.
  • During a second Trump term, Australia should: Tread carefully to avoid showing up on Trump’s tariff radar, with the key risks being the removal of existing tariff exemptions, tariffs on Australian exports of automotive goods to the United States and retaliatory tariffs if Australia taxes US digital services firms.

Long-term trends

The United States will continue to be more inwardly focused than it was before 2016. There will be a greater focus on national resilience through the fusion of economics, national security and elements of industrial policy. The next administration will seek to reshore economic activity to the United States, particularly critical supply chain components and strategic goods.

The next administration can be expected to view China as a strategic competitor and take steps to curb China’s rise. Decoupling on the margins of the US-China relationship will continue to occur, particularly with respect to advanced technologies with military applications. Chinese investment and people flows will attract greater scrutiny through a national security and strategic economic competition lens. The United States will be more inclined to throw the domestic and international rulebook at China on trade and other issues. However, while both candidates competed to be tough on China, neither candidate had a clear strategy to address the China challenge or a roadmap to replace the former engagement strategy.

Container ship
Getty Images

Multilateral trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will still take a back seat to more focused bilateral negotiations and trade negotiating strategies will continue to reflect a mercantilist view of trade. The United States rejoining CPTPP will not be a major priority, although a Biden administration will be more sympathetic.

The United States will continue to prosecute its view that the World Trade Organization (WTO) has over-reached in making trade law rather than just adjudicating disputes and the administration will continue to seek change in the WTO.

Blue book

What changes under Biden

A Biden administration can be expected to pursue a more cooperative approach to international trade negotiations and multilateral institutions in conjunction with alliance partners. It will also need to decide what to do with some of the Trump administration’s legacy of tariffs. A Biden administration can still be expected to pursue a protectionist agenda aimed at a traditional Democratic constituency, with labour and environmental standards likely elevated in US negotiating objectives.

These traditional Democratic instincts on trade may be tempered somewhat by the partisan realignment on trade issues that has occurred as a result of President Trump’s protectionism. Democrats are now more positively disposed to trade and trade agreements than was the case before 2016. Whether this partisan realignment can be sustained post-Trump remains to be seen, but the adverse economic effects of Trump’s trade policies will give congressional Democrats pause before pursuing a protectionist agenda of their own.

How Democrats respond to the expiry of the extant Trade Promotion Authority (TPA) on 1 July 2021 (in place since late June 2015), will be an important test of the Democratic attitudes for the remainder of the Biden administration. If TPA is not renewed, this would indicate that a Democratic Congress might see to frustrate some of Biden’s trade negotiating agenda.

Re-shoring and industrial policy

A Biden administration has flagged a greater focus on economic self-sufficiency in relation to critical and strategic goods, as well as "Buy American" and reshoring initiatives, and a more activist industrial policy.

Regional deals

Biden may make an early effort to rejoin the CPTPP, which would be welcomed by existing members, although this may come through efforts to link up new and existing deals, rather than rejoining the CPTPP as is. Biden will need to secure the support of Congress and may face opposition from protectionist Democratic members of Congress.

Biden could be expected to take a more constructive and engaged approach to the WTO. However, it is worth recalling that US concerns about the WTO pre-date the Trump administration and the United States is likely to remain dissatisfied with the way the WTO functions in the absence of reforms.

Biden can also be expected to restart the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations and use these talks to remove some of the Trump administration’s tariffs on European Union (EU) imports.

Existing bilateral deals, such as the Trump administration’s deal with Japan, could be folded into broader regional deals. A Democratic administration is expected to elevate environmental and labour rights standards in its negotiating objectives for trade agreements while downplaying the need for the bilateral balancing that was the main objective of the Trump administration.

China

Beijing’s commitments to improved intellectual property protections in its phase one trade deal are extensive and worth salvaging. Biden may seek a way to do this while ditching the purchasing commitments and using the prospect of the removal of existing tariffs as leverage in new trade talks. However, Congress and the administration can still be expected to maintain a tough stance with respect to China. The Biden campaign already indicated an increased focus on the resilience of domestic supply chains and will implement "Buy American" measures designed to reshore domestic production of strategic goods and decouple from China with respect to critical goods and services.

The World Trade Organization

Biden could be expected to take a more constructive and engaged approach to the WTO. However, it is worth recalling that US concerns about the WTO pre-date the Trump administration and the United States is likely to remain dissatisfied with the way the WTO functions in the absence of reforms. The key sticking point is what the United States sees as the WTO straying into law-making functions, beyond its dispute settlement remit. The United States is likely to continue to use its effective veto over many aspects of WTO decision-making to prosecute a reform agenda with which Australia will need to engage.

What Australia should do

A return to a more multilateral approach and greater receptivity to regional as well as bilateral trade deals will be welcome from Australia’s point of view, as well as a more cooperative and respectful approach to traditional alliance relationships. Australia should seek to facilitate coalition building among alliance partners with a view to developing a joint approach to balance China through greater US economic engagement in the Indo-Pacific. Australia also has an important role with other small open economies in bridging the gap between the United States and EU and the United States and China on the WTO and WTO reform. However, Canberra will need to keep an eye on any trend to greater use of industrial policy, particular where it might disadvantage Australian commercial interests.

Red book

What happens under Trump

A re-elected Trump administration can be expected to continue with a mercantilist trade policy focused on narrowing US trade deficits through bilateral agreements at the expense of broader regional trade agreements and multilateral processes. Under the Trump administration, the trade deficit has widened by the most in 12 years, with the goods deficit the biggest on record. The failure of the administration’s first-term trade policy, despite some renegotiated trade agreements, will only encourage a doubling-down on existing policies rather than a fundamental reconsideration.

In practice, this means the continued imposition of ad hoc tariffs and other trade barriers under various executive authorities and the long-standing delegation of commerce powers from Congress to the president. These tariffs will likely be tied to various trade negotiations in an effort to pursue better outcomes, although in practice will only serve to further complicate these negotiations.

China

China is lagging on its ‘phase one’ trade deal purchasing commitments, which were always rather heroic, but the global economic downturn due to the pandemic has made living up to the terms of this agreement exceedingly difficult. The phase one deal provides sufficient release clauses that would provide the two parties with an out with respect to these purchases while preserving other elements of the agreement. China can still be expected to make an effort to meet the terms of the agreement to try and maintain at least the superficial impression that it negotiates in good faith.

US sanctions against Chinese entities and other measures aimed at reducing dependence on China, some of which have congressional support, may be ramped up to the point where the US and Chinese economies continue to decouple, in contrast to the phase one trade deal, which sought to bind US-China goods trade more closely together.

The Trump administration will need to decide whether it walks away from the agreement, which it can do without congressional authorisation, or try and salvage the agreement as the basis for a ‘phase two’ negotiation that seeks to build on the useful elements of the deal, which include Chinese commitments to significantly enhance intellectual property protections and their domestic enforcement.

However, the Trump administration is torn between claiming victory for its phase one deal and Trump’s urge to decouple from China. US sanctions against Chinese entities and other measures aimed at reducing dependence on China, some of which have congressional support, may be ramped up to the point where the US and Chinese economies continue to decouple, in contrast to the phase one trade deal, which sought to bind US-China goods trade more closely together.

Any phase two deal will need to address much thornier issues, including industrial subsidies, support for state-owned enterprises and technology transfer (an investment rather than trade issue). Trump will likely keep in place existing section 301 tariffs against China and impose further tariffs if the phase one trade deal collapses or no progress is made on a phase two.

For its part, China will maintain its existing suite of retaliatory tariffs. China is also inclined to pursue greater self-sufficiency and indigenous innovation, so a re-elected Trump administration will play into this policy agenda. It is quite likely the Chinese Communist Party are happy to see Trump re-elected given the damage his administration has done to key alliance relationships. Trump’s protectionism is a manageable problem from a Chinese perspective, certainly compared to China’s many other pressing issues and harms US interests more than Chinese interests.

Section 232 tariffs — steel and aluminum

These tariffs will likely remain in place, although may be removed as part of the administration’s negotiations with affected countries. Australia’s continued exemption will depend in part on the extent to which Australian producers exploit their competitive advantage under these tariffs. Aggressive exploitation of their price advantage compared to competitors in other countries could see Australia reappear on Trump’s tariff radar.

Europe and car tariffs

A re-elected Trump administration may open up a new trade war front with the European Union (EU) in relation to automotive imports, in addition to tariffs designed to retaliate for EU digital services taxes and tariffs authorised by the World Trade Organization (WTO) in retaliation for EU subsidies to Airbus. Australian automotive-related goods exports to the United States are potentially at risk from auto tariffs.

The World Trade Organization

A Trump administration can be expected to continue to undermine the WTO by blocking appointments to the Appellate Body and the appointment of a new Director-General. The administration has shown little interest in joining efforts to reform the WTO, notwithstanding its own list of demands for change, and is unlikely to be supportive of new rounds of multilateral trade liberalisation.

What Australia should do

Australian trade diplomacy will need to focus on keeping the United States engaged with multilateral institutions and processes, not least the WTO. Reform of the WTO in a way that addresses US concerns, without seeing a reversion to non-binding dispute settlement, should be a priority.

Australia potentially remains a target for tariffs on steel and aluminum, as well as automotive components, if the Trump administration revisits national security tariffs for automotive imports. Australia could also be targeted for section 301 tariffs if it revives proposals for a Digital Services Tax. The Australian Government’s imposition of a mandatory media code on Facebook and Google could be viewed as a de facto digital services tax that discriminates against US companies and could provoke retaliatory tariffs similar to those threatened against French and other European and non-European exporters. The United States could also pursue this issue through the WTO or the Australia-US Free Trade Agreement (AUSFTA.) This could inflict significant economic damage to the Australian economy.

The United States decoupling from China in areas such as technology and investment will likely require Australia to broadly align some of its regulatory frameworks with US measures, with the United States seeking support from Five Eyes partners to make these measures effective, even while it tries to go it alone on trade issues.

Economic policy

David Uren

Overview: The United States will be the most dynamic of the G7 economies and the driving force of global innovation.

Biden contrasts with Trump: A Biden administration would be redistributive with higher corporate taxes and re-engage with multilateral institutions, like the WTO. Trump would continue unilateral responses to global economic challenges and single-minded pursuit of growth through lower taxes and interest rates.

What Australia should do

  • Regardless of who wins the election: Australia should find ways to improve upon and leverage a strong bilateral economic partnership built on investment and trade in technologically advanced goods and services in both directions.
  • During a Biden administration, Australia should: Work with other major trading nations to reform the WTO while remaining alert to potential risks to Australia-US Free Trade Agreement provisions from Biden’s plans for nationalist government procurement.
  • During a second Trump term, Australia should: Ensure that Australia’s interests are considered when the United States pursues bilateral trade deals with China and other trade partners. Redouble political efforts to cut Australia’s elevated corporate tax rate, which makes Australia uncompetitive in attracting fresh US investment.

Long-term trends

The United States economy is showing, yet again, its resilience in the face of a massive economic shock, with strong growth expected over the rest of 2020 and unemployment rates falling.

Although the COVID-19 pandemic continues to ravage the nation and some states have reimposed restrictions, the jobless numbers have been falling since June and were down from an April peak of 14.7 per cent to 7.9 per cent by September. The International Monetary Fund (IMF), which in June had predicted an eight per cent contraction in the US economy, now only expects a 4.3 per cent fall. It was the fund’s biggest growth upgrade for any major developed or emerging economy.

The United States is no longer the dominant force behind global growth but it still has a powerful influence, accounting for 15 per cent of world GDP and 17 per cent of world imports. It is both the biggest source and destination of global capital flows.

For Australia, the inherent strengths of the US economy ensure it will remain a strong trade and investment partner. The United States is the largest source of foreign investment in Australia and the largest destination for Australian investment.

The United States is also the largest source of the transformative technologies revolutionising the way people live and work and of the companies that drive them. US venture capital firms have industrialised the process of innovation and the development of break-through firms.

Regardless of who wins the presidential election, the United States will remain the most dynamic economy within the G7 advanced nations and a powerful source of innovation for the world. Its resilience, shown also following the global financial crisis (despite it being the crisis epicentre), is due in part to the flexibility of its labour markets — the crises may be more deeply felt, but the recovery is more rapid. Other factors contributing to this include the forceful intervention of the US Federal Reserve and the strength of its banking system which, as the IMF has reported, entered the COVID-19 outbreak with substantial capital and liquidity buffers.[^85]

For Australia, the inherent strengths of the US economy ensure it will remain a strong trade and investment partner. The United States is the largest source of foreign investment in Australia and the largest destination for Australian investment. It is Australia’s third-largest trading partner. Trade in both directions of both goods and services has a high technology content. These strengths will continue, regardless of the election result.

Blue book

What changes under Biden

Joe Biden campaigned on a radically redistributive economic agenda, which will boost federal spending by an estimated US$5.4 trillion over a decade, partially offset by US$3.4 trillion in additional taxes aimed exclusively at top income earners and corporations.

A Biden administration aims to impose a 12.4 per cent payroll tax on earnings above US$400,000 and reverse the Trump administration’s tax cuts to the top marginal tax rate. It also seeks to raise the company tax rate from 21 per cent to 28 per cent, introduce a minimum tax on companies with profits above US$100 million and double the imputed tax on earnings derived from low tax jurisdictions to 21 per cent. These corporate tax changes would reintroduce some of the incentives for US corporations to hold profits offshore and would likely dampen investment overseas.

Major spending initiatives include expanding the health coverage of the Affordable Care Act, introducing free pre-kindergarten education and minimum paid family leave, and big boosts to social security and housing assistance. Biden also proposes spending US$2 trillion on “clean energy” initiatives in support of a goal to make electricity generation carbon neutral by 2035.

Democratic Presidential Candidate Joe Biden arrives to deliver remarks at an aluminum manufacturing facility in Manitowoc, Wisconsin, September 2020
Democratic Presidential Candidate Joe Biden arrives to deliver remarks at an aluminum manufacturing facility in Manitowoc, Wisconsin, September 2020
Getty Images

Although the Biden team is reported to have cooled to introducing a carbon price, its climate policy calls for implementation of a carbon “border adjustment” scheme, under which tariffs would be levied on energy-intensive imports from countries deemed to be falling short of their Paris Climate Accord (Paris Agreement) commitments.

A Biden administration will also adopt a more conventional approach towards the independence of the US Federal Reserve, reducing the risk of monetary policy becoming the target of executive policy.

Biden has not articulated his policy on the World Trade Organization (WTO) or on the trade war waged by Trump on China but is expected to comply with the recent WTO finding that the Trump tariffs on China are illegal. The Biden administration would also be likely to break the impasse over appointments to the WTO’s appeals panel.

However, Biden’s campaign included some openly protectionist elements, with a commitment to channel US$400 billion in government procurement exclusively to US companies. This would breach the WTO’s procurement protocol. Biden has said he will work with allies to reform the trade rules to permit it, saying it should be possible for the government to dictate that taxpayers’ dollars are spent in their own country.

What Australia should do

Australia welcomes the more predictable engagement of a Biden administration with global institutions, including the WTO. It will appreciate the more constructive participation by the United States in forums such as the G20, Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit that are expected from a Biden administration.

Australia needs to be alert to the implications of Biden’s “Buy American” policies for the Australia-US Free Trade Agreement, which stipulate that firms from each nation would be treated as national firms for the purpose of government procurement, with limited exemptions.

A renewed commitment by Biden to the Paris Agreement could be more problematic for the Australian government, which is less enthusiastic about multilateral approaches to climate policy. The potential for the Biden administration to impose carbon tariffs may threaten Australian aluminium and steel exports to the United States.

The company tax changes promised by the Biden campaign would remove some of the pressure on Australia to lower its company tax rate. Higher US company taxes may, however, slow the US recovery from the pandemic and dampen the appetite of US business for investment more generally.

Australia needs to be alert to the implications of Biden’s “Buy American” policies for the Australia-US Free Trade Agreement, which stipulate that firms from each nation would be treated as national firms for the purpose of government procurement, with limited exemptions.

Red book

What happens under Trump

Although President Donald Trump had an economy significantly weakened by the COVID-19 pandemic going into the election, he was still rated as a better economic manager than his challenger, Joe Biden. This perception is also reflected by the stock market, which Trump has himself frequently used as a barometer of his success. Some stock market indices sit above their pre-COVID peaks, almost all others are close to those levels.

Until the COVID-19 outbreak, the first three years of the Trump administration were marked by strong economic growth averaging 2.5 per cent and unemployment dropping to a 50-year low of 3.5 per cent by September 2019. The US economy had been close to recession in the final year of the Obama administration, with IMF forecasts taking seriously the idea of a “secular stagnation” under which US growth would remain slow for the long term.

The Trump administration brought three crucial features to its management of economic policy:

  • Personal and corporate tax cuts;
  • A preparedness to pressure the US Federal Reserve; and
  • Trade and investment protectionism.

The administration’s strongly nationalist “America First” slogan was reflected both in the structuring of business taxes to encourage domestic US investment and in the readiness to use tariffs to protect domestic industries.

The corporate tax cut lowered the federal rate from one of the world’s highest, at 35 per cent, to an internationally competitive 21 per cent. The corporate tax package was revolutionary, shifting the United States to a “territorial” system under which only US derived profits are taxed, while foreign-derived profits are exempt. It included incentives for US multinationals to repatriate the cash they had accumulated offshore to avoid the punishing US taxes, with almost US$800 billion being returned to the United States in the first 12 months.

Under a second term, Trump proposes further incentives in the form of tax credits for companies to bring back their offshore operations, with a particular emphasis on China, while US firms with offshore manufacturing could face tariffs on goods shipped back to the United States. There are no details on how these tax credit and tariff schemes would work. It is possible the tax credit for repatriating manufacturing would be limited to companies with Chinese operations, while the punitive tariffs may only apply to firms actively shifting operations offshore.

Under a second term, Trump proposes further incentives in the form of tax credits for companies to bring back their offshore operations, with a particular emphasis on China, while US firms with offshore manufacturing could face tariffs on goods shipped back to the United States.

However, the emphasis on encouraging the repatriation of supply lines globally and on focusing fresh investment in the United States rather than abroad is likely to intensify and result in a further pull-back in US investment abroad, including Australia. The Trump administration has also canvassed reductions to the capital gains tax rate to encourage domestic investment.

The 2017 tax cuts were calculated to stimulate the US economy. While most of the corporate cuts were permanent, the personal tax cuts are scheduled to start phasing out from 2025. Clear commitments have not been given, but a re-elected Trump administration is expected to renew them.

Trump has been much more assertive in his approach to the US Federal Reserve, criticising its rate increases in 2017 and 2018 and threatening to remove chairman Jerome Powell. The Fed’s switch to rate cuts in August 2019 was framed by the president’s strongly expressed opinion.

In the lead up to the 2020 election, President Trump nominated economist Judy Shelton to the board of the Federal Reserve. Shelton has been a harsh critic of the Fed, and her nomination is seen as a way for Trump to increase his leverage over the institution, including speculation that she may be appointed chair. Her nomination is not assured, with key Republican senators opposed, yet a re-elected Trump administration is expected to redouble efforts to curb the independence of the central bank, with the potential that US monetary policy could be kept more expansionist than economic conditions warrant.

Trump has made his unilateral and protectionist approach to trade a hallmark of his first administration and promises more of the same in a second term. Australia was able to negotiate a rare exemption from tariffs on its steel and aluminium exports to the United States. Trump has frequently threatened to quit the World Trade Organization (WTO) and has legislation prepared to implement this.

The trade war with China has morphed into a broader national security conflict over issues ranging from access to US technology, Chinese students at US universities, Chinese access to US financial markets and human rights. As well as tariffs, the United States is imposing export controls and economic sanctions. The mercantilist approach to trade has not delivered any reduction in the US trade deficit yet it nonetheless will continue in a second term.

What Australia should do

Supported by strong fiscal and monetary stimulus, the US economy is likely to return to growth sooner than other advanced nations. However, the likelihood that the Fed will keep a strongly stimulatory monetary policy may bring a further depreciation in the value of the US dollar, dampening demand in its trading partners. Australia is particularly exposed with the Reserve Bank of Australia’s reluctance to ease monetary policy further, contributing to upward pressure on the Australian dollar.

US investment in Australia is likely to weaken, possibly significantly, as a result of the gap that has opened between the US and Australian corporate tax rates. US investment in Australia slowed modestly in 2018 and 2019 in the wake of the Trump tax cuts. The Australian Government may need to consider reviving planned corporate tax cuts if US investment is to be sustained.

While Australia has established good relationships with the Trump administration, it is at risk of collateral damage from US trade policies. The bilateral deal between the United States and China was followed by China switching its source of barley from Australia to the United States. Australian sales to China of beef and wheat are similarly at risk.

While Prime Minister Scott Morrison has openly sympathised with some of the US complaints about the WTO, it is undeniably in Australia’s strong national interest that the WTO remains the arbiter of global trade and that the United States remains a committed member. Australia should work with the United States and with other leading WTO members to develop a path for reform of the institution.

Navigating Congress

Bruce Wolpe

Overview: Gridlock and deadlock in Congress will persist unless a President Biden has not only a Democratic House but also a Democratic Senate — and the Senate abolishes the 60-vote supermajority requirement for legislation (the filibuster).

Biden contrasts with Trump: Under Trump, Congressional Democrats will maintain unrelenting hostility, subject the administration to unprecedented oversight, and possibly launch a second impeachment trial. Under Biden, Congress becomes more important due to the size and scope of his legislative priorities and his seeking collaboration with Congress.

What Australia should do

  • Regardless of who wins the election: Australia should cultivate an echo chamber in Congress for whatever objectives Australia pursues with the president and his team.
  • During a Biden administration, Australia should: Fully engage in the House and Senate to protect Australia's interests as Congress works through Biden’s objectives in tackling China’s trade, foreign investment and technology regimes.
  • During a second Trump term, Australia should: Turn to its friends in Congress to react to Trump foreign policy objectives that are inconsistent with Australia’s interests — particularly on China.

Long-term trends

The new Congress will convene on 3 January 2021 under three possible scenarios:

  1. A new Congress prepared to do business with a re-elected Donald Trump.
  2. A new Congress prepared to do business with Joe Biden, the incoming 46th president of the United States.
  3. A new Congress in a political and constitutional crisis, with violence erupting across the country and financial markets in turmoil, as the House and Senate deal with an unresolved presidential election, with the identity of the president to be inaugurated on 20 January in doubt.

The new Congress will almost certainly have a Democratic House of Representatives, with Nancy Pelosi continuing as Speaker. The Senate will be narrowly Republican or Democratic depending on the November election, so it is uncertain whether Senators Mitch McConnell (R-KY) or Chuck Schumer (D-NY) will be majority leader. Neither party will have sufficient seats to overcome supermajority (60 vote) requirements to pass legislation, adding uncertainty as to whether a Biden administration — even with Democratic majorities in both House and Senate — will be able to enact comprehensive new programs.

Blue book

What changes under Biden

Capitol Hill becomes much more important under a Biden presidency, especially if the Democrats take the Senate. As a creature of the Senate, Biden will want to work in tandem with lawmakers, using congressional processes to build support for his initiatives and to ratify his policies in spending and legislation.

Biden’s immediate legislative priorities are very straightforward and immense in scope:

  • Controlling the pandemic and putting a nationwide vaccine program in place
  • An economic recovery program, funded by a restructuring of the tax system, to lift the United States out of the near-Depression underway
  • Enacting more comprehensive healthcare reform and healthcare coverage

Biden will aim for the enactment of these measures within the first 100 days of his term. His initial agenda will reprise to some degree his responsibility, as vice president, in securing early major victories for President Obama in 2009, starting with the American Recovery and Re-enactment Program (HR 1) signed into law one month after Obama assumed office. Other immediate priorities for him will also include:

  • Racial justice and voting rights: new laws on police standards and ensuring all voters have access to the polls
  • Climate change and global warming: a new clean energy and environmental policy for the United States. The United States will return to the Paris Climate Accord. This will affect the context of the debate in Australia on energy and climate policy.
Biden’s success on his legislative program will depend on a Democratic majority in the Senate. That, in turn, depends on whether the Senate eliminates the 60-vote supermajority (the filibuster) required to pass legislation.

Biden’s success on his legislative program will depend on a Democratic majority in the Senate. That, in turn, depends on whether the Senate eliminates the 60-vote supermajority (the filibuster) required to pass legislation. It was this barrier that prevented President Obama from enacting an even more sweeping economic recovery program in 2009, that nearly derailed enactment of the Affordable Care Act (Obamacare) in 2010, and that stopped enactment of major energy and climate legislation (“cap-and-trade”) in 2010. There is scope to work around the filibuster — reconciling budget bills with the House are not subject to the 60-vote requirement — and the 2nd tranche of Obamacare enactments and the Trump tax cuts escaped the filibuster this way. Nonetheless, the filibuster poses a formidable impediment for a Biden administration and the Democrats, should they sweep House, Senate and the presidency. Should Democrats win big, a debate about filibuster reform will dominate the new Senate as it gets underway in early January 2021.

There is one significant area of real cooperation and engagement by Australia with Capitol Hill on an issue of great importance to Australia’s economy: regulating big technology firms. On the heels of the antitrust suit filed against Google in October, next year will likely see further antitrust activity in Washington against Facebook and potentially Amazon on the basis of the market power they possess, and practices that many view as anti-competitive. This hostile posture to these three companies is bipartisan in nature and will survive the election — from Democrats, because of issues of the size and dominance of these companies, and from Republicans, because of perception that Silicon Valley is biased against conservatives.

The US antitrust agencies, the Justice Department and the Federal Trade Commission, and the key committees in Congress, especially the House Judiciary Committee, are well aware of proposals from the Australian Consumer and Competition Commission (ACCC) to impose greater market discipline on these companies. US policy and antitrust pressures — drawing on the ACCC proposals — will, in turn, bolster and validate the ACCC’s initiatives and policies designed to protect and benefit users and consumers of internet technology in Australia.

What Australia should do

Under President Biden, Australia can anticipate that the foreign policy, national security and trade teams assembled by the new president will be composed of thoroughly experienced officials of Obama-Clinton vintage who have been deeply involved in issues affecting Australia for many years. Those relationships will be easy to establish and work effectively.

The overriding issue of critical importance to Australia in 2021 in Washington is China.

Australia must grasp quickly what a Biden administration means for Australia and truly understand the relationship that Biden wants with China and how he proposes to secure it. Biden will be assertive on China, but with greater efforts to build an allied multilateral network stretching from Asia to Europe of like-minded countries and leaders who will engage more systematically with China in order to get to more workable outcomes. Biden’s objectives in tackling China’s trade, foreign investment and internet technology regimes are quite similar to Trump’s, but the development and execution of policy to achieve them will be profoundly different.

For Australia, Congress should be cultivated as an echo chamber for whatever objectives it pursues with President Biden and his team. To maximise what can be done, working with the key committees in both houses — Foreign Affairs, Armed Services, Intelligence, Appropriations — to advance issues of concern and priority to Australia will be essential.

A US-China Cold War would have severe implications for Australia and its relationships with both the United States and China. A Biden presidency will likely enable Australia to be more forthright with respect to China, in partnership with the new president and agenda.

For Australia, Congress should be cultivated as an echo chamber for whatever objectives it pursues with President Biden and his team. To maximise what can be done, working with the key committees in both houses — Foreign Affairs, Armed Services, Intelligence, Appropriations — to advance issues of concern and priority to Australia will be essential. Fortunately, Australia can build on the excellent work of the Friends of Australia Caucus in the House and Senate.[^86] Australia’s embassy in Washington should be staffed up under any election outcome in order to maximise Australia’s enviable position of warm regard and high standing among members of Congress across both political parties.

With respect to US public opinion, there has never been more coverage of Australia in the US media than over the past four years, from the Trump-Turnbull phone call to the bushfires and the pandemic. More media staff and capabilities in Australia’s embassy in Washington will enable Australia to further project its messages to US audiences, including Washington’s political class.

Red book

What happens under Trump

In his first term, President Trump used his executive powers to create policies and see them implemented. This was most especially evident on immigration and trade issues. President Trump only engaged productively with Congress on a sporadic basis, such as with enactment of his comprehensive tax cut legislation, which was his most significant legislative achievement.

Congress in a second Trump term is important but not especially so. Trump has no patience for trying to work with Congress. If the Democrats win the Senate, his most important ally, Senate Republican leader Mitch McConnell, will only have negative power in that he will become more of a blocker against a Democratic agenda than an engineer or enabler of the Trump agenda.

In 2021, the most ambitious new Trump administration proposal would be to rebuild America’s infrastructure — especially airports, roads and bridges. This is one area that is unlikely to face Democratic objection.

With respect to the pandemic, there will be major relief and economic stimulus proposals, and a nationwide vaccination program. Major healthcare reform will have little traction given the unbridgeable gulf between Trump and Democrats in views on what is required to provide comprehensive health insurance coverage to the American people.

If the Democrats win the Senate, Trump's most important ally, Senate Republican leader Mitch McConnell, will only have negative power in that he will become more of a blocker against a Democratic agenda than an engineer or enabler of the Trump agenda.

On foreign policy, a Trump victory means a doubling down on Trump’s drivers of America First: cold war, confrontation and economic decoupling with China; stronger ties with Vladimir Putin and Russia; further weakening of the United States’ commitments to the United Nations, NATO, the European Union, and the World Trade Organization. The United States has already withdrawn from the World Health Organization, the Paris Climate Accord, and the Iran nuclear deal.

There will be no major international aid program initiatives.

Congress will have only limited capacity under President Trump to play a role in these areas. In the Cabinet, the exits of Secretary of State Mike Pompeo, Defense Secretary Mark Esper and Treasury Secretary Steven Mnuchin are highly likely. Another shakeup in the national security staff in the White House, as well as the exits of the current Directors of National Intelligence and the Central Intelligence Agency, should be anticipated.

Wherever the Democrats are in control — either solely in the House or in both the House and the Senate — there will be aggressive oversight of a Trump State Department and the conduct of foreign policy.

It is through such oversight that Congress can push back to a limited extent on Trump’s objectives of stronger ties with Russia and weaker support for NATO; reduced ties to South Korea and Japan; Trump’s relations and negotiations with North Korea’s Kim Jong Un; further reductions of US forces from Iraq, Afghanistan and Syria; more reckoning and pressure with Iran; higher tariffs and their use as a weapon in trade policy; lower immigration targets; and continued neglect on climate change and human rights issues.

President Donald Trump arrives at the US Capitol for the State of the Union address, February 2020
President Donald Trump arrives at the US Capitol for the State of the Union address, February 2020
Getty Images

If only the House of Representatives remains Democratic, there will be limited effective push back on the Trump administration’s foreign policy. Yet if the Senate is also Democratic, then Trump will be confronted with legislation provoking vetoes on issues like arms sales to Saudi Arabia and any abrupt withdrawal of US troops from South Korea.

In the House, Democrats will be in a state of unprecedented and unrelenting levels of anger and hostility at the prospect of another four years under President Trump. Trump’s second impeachment by the House of Representatives over the course of a second term should be anticipated.

What Australia should do

With the possible exception of Israel, no country has had a better relationship with the United States under Trump than Australia. There are few areas of visible policy disagreement and few that surface at the leader-to-leader level. If President Trump continues in office, maintaining that quality in the relationship will be crucial.

In 2021, the overriding issue of critical importance to Australia in Washington is China.

Trump has concluded that China, because of the pandemic that emanated from that country, is responsible for destroying the successful economy Trump claims credit for building through 2019, and for nearly removing him from office in the election. Indeed, Trump has alleged that in early 2020, China deliberately locked down Wuhan and other cities while permitting Chinese travellers to continue to fly out of the country, in order to cripple the US economy and give China a competitive advantage in a COVID-afflicted world. As a result, following his election win, Trump will seek vengeance against China on a scale that exceeds how he conducted the trade war in the first term. A key component of Trump’s response will be to further decouple the US economy from China.

For Australia, Congress should be cultivated as an echo chamber for whatever objectives it pursues with President Trump and his team. To maximise what can be done, working with the key committees in both houses — Foreign Affairs, Armed Services, Intelligence, Appropriations — to advance issues of concern and priority to Australia will be essential. Fortunately, Australia can build on the excellent work of the Friends of Australia Caucus in the House and Senate.[^87] Australia’s embassy in Washington should be staffed up under any election outcome in order to maximise Australia’s enviable position of warm regard and high standing among members of Congress across both political parties.

With respect to US public opinion, there has never been more coverage of Australia in the US media than over the past four years, from the Trump-Turnbull phone call to the bushfires and the pandemic. More media staff and capabilities in Australia’s embassy in Washington will enable Australia to further project its messages to US audiences, including Washington’s political class.

White House leadership

V. Kim Hoggard

Overview: President Donald Trump has rewritten the norms of US governance but the world still expects the White House to meet certain criteria.

Biden contrasts with Trump: A Biden administration signals a return to stability and confident leadership compared to the Trump administration’s lacklustre White House staff, Cabinet secretaries and agency directors.

What Australia should do

  • Regardless of who wins the election: Recognise the critical power Congress holds in enacting White House legislative priorities and increase congressional liaison capacity, forging relationships with legislative committee staff and younger congressional representatives.
  • During a Biden administration, Australia should: Expect a tighter White House operating structure that will have the capacity and experience to address multiple crises, with addressing the pandemic taking precedence. At the same time, Biden's desire for bipartisan support for his ambitious agenda will be a struggle to achieve.
  • During a second Trump term, Australia should: Prepare for more scandal, protests, and possibly further civil unrest and even another impeachment.

Long-term trends

Strong leadership comes in many forms, but stable, lasting democratic leadership fits within a reliable and consistent set of criteria, important factors that define the internal workings of any successful White House. The checklist of questions does not change with whoever takes the oath of office on Inauguration Day.

Whether a White House can successfully govern is marked by key indicators:

  • Is the White House organised?
  • Is there a clear and detailed governing agenda that reflects the majority view while acknowledging dissenters?
  • Are staff communicating effectively with Cabinet, Congress and the American people with one voice?
  • Is there the capacity to engage with world leaders and events?
  • Is there a whole-of-government strategy to effectively manage rapid change and increasing complexity requiring innovation?
  • Does the White House build national unity, trust in the institutions of democracy, promote a positive vision of the future of America?
  • Does it work in strict accordance with the law, without even an appearance of a conflict of interest?
  • Critically, are the president and their staff accessible, accountable and honest with the American people?

We know that President Donald Trump has rewritten the norms of constitutional, bona fide and established governance but these orthodox criteria are a reminder of what much of the nation and the world expect from the White House.

Blue book

What changes under Biden

Joe Biden’s experience, coupled with his belief in the institutions of American democracy, would signal a return to stability and confident leadership.

Biden is competing in a volatile political environment. Clearly, tensions in the United States have been simmering for a very long time but during the course of the Trump presidency, they have become dangerously toxic. Calming and then uniting the country will be critical to Biden’s prospects for managing the multiple crises affecting America and the world.

It is often said, “a President is only as good as the people who surround him." Indeed, successful democracy requires effective teamwork — a critical component of good governance. Biden has made an ambitious commitment to select personnel that reflect the diversity of the nation’s people.

We can expect a President Biden to address the historic imbalance of female representation in government and appoint a record number of women to Cabinet and other high-level positions. By choosing Senator Kamala Harris as his vice-presidential running mate and announcing that he would select an African-American woman as his first Supreme Court appointment, Biden has taken an enormous stride towards greater equality in the executive and judicial branches of government.

Vice President Joe Biden and Dr Jill Biden leave the White House for the final time ahead of the inauguration of Donald Trump, January 2017
Vice President Joe Biden and Dr Jill Biden leave the White House for the final time ahead of the inauguration of Donald Trump, January 2017
Getty Images

Biden would also reverse the Trump administration’s disbanding of the Obama/Biden White House Office of Women and Girls, which was created to coordinate government policy in all areas that impact women’s lives. The rebadged White House Council on Gender Equality would revitalise attention to a multitude of equity issues including healthcare, equal pay, child care and family leave.

One of Biden’s first appointments may be his Secretary of State, a role where the personal relationship between the president and chief diplomat is critical to effective representation of the United States abroad. Biden can be expected to choose a close friend and political ally for this role, possibly Susan Rice, Obama’s former National Security Advisor and a good friend of Biden’s. She would have suitable gravitas with world leaders, who would recognise that she had the ear of the president.

On the domestic policy front, Biden has a wealth of talent from which to choose his cabinet. His transition team includes members of the Warren and Sanders campaign teams, a clever move that not only helps unify the party but adds skill and judgement to the selections. As a ‘consensus politician,’ Biden has pledged to build a diverse administration to rebuild the hollowed-out government agencies and departments of the Trump era. Biden’s choices may well include many of his campaign opponents, such as Elizabeth Warren, Pete Buttigieg, Cory Booker and Andrew Yang.

A Biden presidency will also elevate the critically important issues of global health and science to Cabinet-level status. The Global Health Security Pandemic Office would be reinstated following Trump’s impetuous and, no doubt costly, decision to eliminate this early warning system at the start of his presidency. Biden’s plan to give pandemic experts a seat in the Cabinet would help drive a federal government strategy to respond to a lost year of hesitation, confusion and dangerous denial of the potency of the threat.

We can expect a President Biden to address the historic imbalance of female representation in government and appoint a record number of women to Cabinet and other high-level positions.

By boosting the status of the Office on Science and Technology Policy, a Biden administration might begin to restore scientific integrity in US Government and rebuild public trust in science.

The creation of a White House office focused on climate change (an office that “goes beyond the EPA”) would be in keeping with Biden’s pledge to return the United States to the Paris Climate Accord (Paris Agreement) on his first day in office. This new focus would aim at a whole-of-government approach to ensure consistency in climate policy across domestic and foreign policy issues.

Establishing these additional strategic offices within the White House highlights the key issues of Biden’s agenda. To ramp up his administration’s capacity to progress these policies, he will draw on an ability to “work across the aisle” in Congress.

Biden remembers the days when bipartisanship was possible. His self-proclaimed ability to forge unity on crucial challenges is appealing to an electorate exhausted by congressional inaction, government shutdowns and party politics. Unfortunately, there is little evidence to suggest the escalated tensions and partisan polarisation can be reversed. While Nancy Pelosi has kept in check the internal divisions of the Democratic party, Republicans have floundered, consumed by Trump’s divisiveness.

Under a divided Congress, Biden’s famed “powers of persuasion” will not be nearly as effective. Without a Democratic triple crown — the White House, House of Representatives, and Senate — they will struggle to enact their ambitious agenda.

What Australia should do

To respond to these political realities, Australia should increase its congressional liaison capacity, forging relationships with legislative committee staff and younger congressional representatives. Preparation is the key as a Biden administration is likely to move fast from day one.

Red book

What happens under Trump

In 2016, presidential candidate Donald Trump raged against what he described as chaos in the nation, declaring at the Republican National Convention, “I alone can fix it.”

A president, however, is only as effective as the people around him. Working in the administrations of Ronald Reagan and George HW Bush, I witnessed their successes when this axiom was applied.

Donald Trump’s White House has had an extraordinary turnover rate, mostly under controversial circumstances. An unprecedented number of critical roles have changed hands multiple times, leading to the dysfunction that has hampered a coordinated response to COVID-19 and contributed to unnecessary loss of life, according to numerous public health authorities.

President Trump has had four chiefs of staff, five deputy chiefs of staff, six communications directors, four press secretaries, four directors of legislative affairs, four national security advisors and 29 National Security Council staff, most of whom resigned under pressure or were fired. Beyond the White House, Trump has churned through Cabinet secretaries, with nine out of 15 forced out.

If Republicans win the White House but lose control of the Senate, a second Trump term is likely to be characterised by even more bitter partisanship, potential widespread social unrest, and further violence.

With this record, President Trump faces an uphill battle to attract suitably qualified people. Without the oversight of effective White House staff, Cabinet secretaries and federal agency directors, the president’s shortcomings will go largely unchecked.

Scandals impede the ability of a president and his staff to focus on governing and meeting the challenges at home and abroad. President Trump is under investigation in three separate probes concerning tax fraud, embezzlement and government spending at his properties. Any one or all of these allegations could force him to face the courts.

If Democrats retain the House of Representatives and take control of the Senate, Trump would be more exposed to further investigation. There would likely be a strong appetite amongst Democrats to impeach the “Law and Order” president a second time — this time for financial and political infractions involving the Emoluments Clause and the Hatch Act.

The size of a Trump re-election victory, and the down-ballot results in the Congress, will determine his capacity to govern aggressively or be confronted with increased resistance from an emboldened Democrat Congress. Either outcome will undoubtedly prove challenging for Australia in attempting to navigate between competing Republican and Democrat agendas.

What Australia should do

Despite straining many traditional US alliances, President Trump and the West Wing have maintained a largely cordial relationship with Australia. This is mainly due to the long-standing importance of the US-Australia partnership and decisions taken by the current Australian government to pursue personal relationships at many levels, but especially between the prime minister and president. Australia is well-positioned to continue the “Team Australia” approach while remaining poised to offer objective and frank advice as an influential and respected middle power.

Former National Security Advisor John Bolton described President Trump as not having a grand geopolitical strategy.

There is an opportunity for Australia to fill that vacuum, particularly in an Asia-Pacific region that is vital to both Australia and US interests.

President Trump participates in a joint news conference with Australian Prime Minister Scott Morrison at the White House, September 2019
President Trump participates in a joint news conference with Australian Prime Minister Scott Morrison at the White House, September 2019
Getty Images

It is difficult for a president to employ a whole-of-government approach to tackle his agenda when federal departments, agencies and their expertise are politicised or when their validity challenged. It is unlikely that President Trump will be able to rebuild trust within a chastened bureaucracy. He has frequently demonstrated his preference to produce “deals” or promulgate policy ideas from “outsiders” and industry chiefs, bypassing government agencies and expertise. With this in mind, Australia should also establish relationships more broadly within the United States, outside traditional government-related pathways, while at the same time increasing contacts with diplomats, key state officials and Congress, as well as defence, intelligence, foreign affairs and trade chiefs, to communicate Australian priorities.

President Trump’s divisive rhetoric has inflamed an already divided society. If Republicans win the White House but lose control of the Senate, a second Trump term is likely to be characterised by even more bitter partisanship, potential widespread social unrest, and further violence.

The Australian government may then face a greater challenge to attract the attention of a Trump White House that would be distracted from the issues of grave importance to Australia’s national interests.

Competing ideologies in technology competition

Brendan Thomas-Noone

Overview: Technological competition between the United States and China is intensifying and the trend toward decoupling will continue under the next administration.

Biden contrasts with Trump: A Biden administration will likely cite human rights concerns as a central factor in pulling away from China technologically. A Trump administration will continue company bans and intellectual property enforcement to put America first.

What Australia should do

  • Regardless of who wins the election: Australia should recognise that global technological trends will not revert in the direction they had been heading for most of the past 30 years and invest more significantly in Australia’s own capability and R&D base.
  • During a Biden administration, Australia should: Balance the growing ideological dimensions of US-China technological competition with the strategic requirements of collective alignment and action in the Indo-Pacific, particularly with nations indifferent to those ideological dimensions.
  • During a second Trump term, Australia should: Prepare for further pressure from the United States on Australia’s links to Beijing’s research and technological base.

Long-term trends

Regardless of the election outcome, global technological trends will not revert in the direction they had been heading for most of the past 30 years: towards further integration, interoperability and connectedness. While technological globalism never truly existed — at least in the form that was espoused and hoped for by many Silicon Valley utopians in the early 1990s — the fracturing of the internet, science and technology collaboration and high-tech supply chains will continue to be driven by competition between the United States and China. It will also become increasingly ideological.

From a market competition to a geostrategic and ideological one

The utopian dream of many techno-liberal activists and thinkers of the early and mid-1990s — that the advent of the internet would see national borders effectively disappear — never occurred in reality.[^88] Some states embraced the globalising aspects of the digital revolution more than others, but China is, perhaps, the best example of a country that engaged the internet on its own terms from the very beginning. While the internet operates on a commonly shared protocol, over time China has developed a sophisticated set of tools that essentially ensures the network within its borders is distinct, controlled and censored. Since 1994, when the first undersea cabling connected China to the network that would become the modern internet, Beijing has employed a complex strategy to govern the internet where it can, including through the manipulation of physical infrastructure, co-opting global content providers and the direct censorship and control of information and data. This long project resulted — in-part — in China’s declaration of “cyber sovereignty” in 2010.[^89]

While technological globalism never truly existed — at least in the form that was espoused and hoped for by many Silicon Valley utopians in the early 1990s — the fracturing of the internet, science and technology collaboration and high-tech supply chains will continue to be driven by competition between the United States and China.

Throughout this same period, the United States and the West viewed the globalisation of technology largely in pure economic terms. The growing number of global internet users was a potentially politically liberalising force, but this went hand-in-hand with the expansion of the market. For instance, when China attempted to forge its own wi-fi standard in 2003 — largely out of a desire to exert more political control and surveillance over who could log onto its networks — US tech industry and the Bush administration pushed back, with Beijing eventually abandoning the plan. But, importantly, the reasons for US push back at the time were not out of concern regarding the potential expansion of China’s surveillance state, or that censorship spreading overseas, but primarily over worries of the global wi-fi market splitting in two.[^90]

While China had viewed the internet and technological globalisation in ideological terms from the start, the United States arrived at it relatively belatedly. Speaking at The Newseum in 2010, then-Secretary of State Hillary Clinton outlined an agenda on freedom and the internet, arguing “on their own, new technologies do not take sides in the struggle for freedom and progress, but the United States does.”[^91] While the speech and agenda were prescient considering the role of digital connectivity during the Arab Spring only a year later, it was only later in President Obama’s second term where the marrying of ideology, geopolitical competition and technology began to take shape in relation to China. In May 2016, on his way to the annual Shangri-La Dialogue in Singapore, then-Secretary of Defense Ash Carter charged China with violating the “spirit of the internet” by abiding and perpetrating systemic intellectual property theft and by simultaneously enjoying the benefits of a free internet, while restricting it when convenient.[^92] This intervention — notably from a Secretary of Defense — was during a last-ditch effort to sell the strategic importance of the Trans-Pacific Partnership to domestic audiences in the United States and throughout the region. It also foreshadowed the rupture to come.

The slow splintering

Technological globalisation will continue to fracture in 2021 due to the pressure now being exerted on all areas of integration, from scientific collaboration and design, investment and markets to infrastructure, data and immigration.[^93] Importantly, many of the new regulations, rules and laws aimed at technological decoupling over the past four years have been driven by Congress, not the White House. While the executive branch has played a major role in highlighting the need to consider various scientific and technological issues as part of the United States’ growing competition with China, Congress has passed a series of bills that will change the day-to-day functioning of the technological relationship. For instance, foreign investment in US-based technology firms and start-ups are now screened by the Committee on Foreign Investment in the United States for national security implications. Even non-controlling stakes in companies are subject to review if they afford the foreign investor access to data, critical technologies or decision-making processes. Congress has also expanded export controls to “foundational” and “emerging” technologies covering fields like robotics, 3D printing, quantum computing, advanced materials, surveillance technologies, synthetic biology and machine learning, among others. Once these protocols and those that are forthcoming are fully implemented, many will have a profound and long-term impact on the overall depth and structure of the US-China relationship, particularly as Beijing seeks to pass its own set of similar regulations in response.[^94]

Workers build smartphone chip component circuits at the Oppo factory, Dongguan, China
Workers build smartphone chip component circuits at the Oppo factory, Dongguan, China
Getty Images

The last major driver that will ensure the tech policies of the past four years continue is the centrality of technological superiority to the United States’ overall military strategy. As the US defence budget stagnates (or declines in real terms) in 2021, investing in new cutting-edge technologies being developed in start-ups, universities and other joint-ventures outside of the defence industry will only increase in importance as a fundamental tenet of US defence strategy in the Indo-Pacific. As China continues to invest heavily in modernising its defence forces — particularly in capabilities that would allow it to not only deny a US military intervention but also potentially project power throughout the region — the Pentagon hopes to broadly offset these advances with a technologically and qualitatively superior force.[^95]

However, many advances that will enable this next-generation force will be developed not by major or traditional defence companies, but by innovative start-ups and university researchers working often on dual-use technologies, like robotics, next-generation networks, machine learning algorithms and even biotechnologies. Hence, the more Washington feels it is under pressure regarding Beijing’s own technological investments and capability, the more likely it is to try and limit and control the flow of technology and scientific collaboration between these parts of its research base in the United States and among its allies and China. It was often the same during the Cold War, with the US government worrying to lesser or greater degrees throughout that conflict about technological and scientific engagement with the Soviet Union in dual-use fields, depending on its confidence in its own military-technological capability.

Blue book

What changes under Biden

Human rights are likely to become a significant framing device for Democrats in how they approach technology under a Biden administration, particularly those technologies that enable the type of “digital-authoritarianism” that Beijing has forged in recent years. This will become an even more animating factor in US foreign and defence policy as fears grow of China’s surveillance technology spreading in Latin America, Africa, Central Asia and Southeast Asia. At times over the past four years, human rights have played a role in the Trump administration’s approach to strategic technology issues, notably as the underlying rationale of “The Clean Network” — an initiative promoted by Secretary of State Michael Pompeo to build a coalition of countries and companies dedicated to “data privacy, security, human rights and principled collaboration.”[^96] However, these efforts and messaging have often been undercut by President Trump himself. Under a Biden administration, a more focused and consistent prioritisation of these issues is likely.

The Biden campaign has promised an investment of US$300 billion in R&D, breakthrough technologies and advanced manufacturing, if elected. Rather than being just a campaign promise, there is a real possibility this proposal — or something like it — could get off the ground in Congress.

A Biden administration is also likely to spearhead a reinvestment in America’s science and technology ecosystem. This has become a major plank of the Democratic policy platform in recent months. The Biden campaign has promised an investment of US$300 billion in R&D, breakthrough technologies and advanced manufacturing, if elected.[^97] Rather than being just a campaign promise, there is a real possibility this proposal — or something like it — could get off the ground in Congress. Over the past twelve months, Congress has begun to coalesce around the need to reform the United States’ national laboratory system, its major R&D organisations and growing spending overall in order to compete with China’s industrial policies. For instance, The Endless Frontiers Act (the Act), introduced by Senators Chuck Schumer (D-NY) and Todd Young (R-IN), would inject US$100 billion over five years into the National Science Foundation’s budget, focusing the added spending on university-based regional hubs working on a number of emerging technologies.[^98] While the Act may have its limits and is likely misaligned for how modern, globalised science now operates, it is a demonstration of a growing bipartisan belief that the United States cannot simply attempt to stem the flow of intellectual property and technological knowledge to China.[^99] With a Biden administration making this a central aspect of its domestic and strategic agenda it is highly likely to gain traction in 2021.

What Australia should do

A significant question is raised for Australia: What is the broader implication of the growing emphasis on human rights as central to technological questions in the Indo-Pacific, especially under a Biden administration? A more ideological approach to strategic competition with China will likely lead to pressure on US allies in the region to join initiatives like The Clean Network that place human rights and values at their core. While values — particularly around the role of technology in society — are crucial, these initiatives may alienate countries in the region which are critical to any collective effort to balance China strategically in the Indo-Pacific.[^100] For instance, Vietnam — an important partner for the United States and Australia — does not view the need to place human rights at the centre of its technology policy in the way Washington or Canberra may wish.[^101] Balancing the growing ideological dimensions of US-China technological competition and the strategic requirements of collective alignment and action in the Indo-Pacific will be a critical issue for Australia to manage.

Red book

What happens under Trump

A second Trump term will see a continuation of the policies of the past four years:

  • A focus on how the United States can crackdown on intellectual property theft;
  • Data concerns; and
  • Linking trade disputes to the broader technological relationship with China.

The Trump administration has used two major policy levers at its disposal that it would likely continue to utilise during a second term. The first lever: heavy enforcement of existing intellectual property regulations, grant rules and criminal code as an effort to stem China’s efforts to grow science and technology collaboration with American researchers. The second: the use of legal mechanisms to ban individual Chinese companies from either the US market entirely or from transacting with American firms. The Justice Department’s ‘China Initiative’ — a multi-year effort to bring economic espionage and theft cases in all 50 states — will intensify.[^102] The administration will also continue to take measures against individual Chinese companies — sometimes as part of broader trade disputes with Beijing — in an effort to limit their access to the US market. For instance, US companies supplying semiconductors to Chinese chip-manufacturer Semiconductor Manufacturing International Corporation (also known as SMIC) recently received letters from the administration warning that the firm was supplying dual-use technology to the People’s Liberation Army. It has also been reported the Trump administration has convinced other governments to not sell the company advanced manufacturing equipment in order to prevent it from producing the most advanced versions of semiconductors available.[^103]

A man looks at his phone near a giant image of the Chinese national flag on the side of a building in Beijing, October 2
A man looks at his phone near a giant image of the Chinese national flag on the side of a building in Beijing, October 2
Getty Images

What Australia should do

Seamless technological integration between the United States and China was never a reality. But with the rise of China’s indigenous ability to forge its own path in many emerging and critical technologies, responses in both Washington and Beijing — driven by a mix of economic, security and ideological considerations — are pulling apart the globalised technological world that grew exponentially over the past three decades.[^104] Canberra will face growing pressure from a second Trump administration on its own links to Beijing’s research and technological base, considering the deep connections Australia has across similar fields with the United States. Australia is already putting in place some of the mechanisms needed to chart a path in this area, like the government’s proposal to review international agreements made with states, universities and other organisations at the subnational level. However, more fundamental investments in Australia’s own capability and R&D base are needed if Canberra expects to be able to weather the fracturing of the global technological system.[^105]

Conspiracy theories

Elliott Brennan

Overview: Given the environment of contested truth that engulfed this election, the forces of conspiracy theories and militarised disinformation will be strengthened in 2021, under any scenario.

Biden contrasts with Trump: President Trump views the conspiracy theory landscape as broadly favourable to his political fortunes. As such, a Biden administration is more likely to take serious actions to combat these forces.

What Australia should do

  • Regardless of who wins the election: Australia should prepare to deal with an activated conspiracy theory community which will have implications including the uptake of vaccines. They should acknowledge both the national security and social aspects of this challenge and conduct large-scale public e-safety campaigns.
  • During a Biden administration, Australia should: Prepare for a disenfranchised and desperate conspiracy theory community and lobby for the Biden administration’s ambitions for the restoration of global democracy to also encompass action against anti-democratic forces online.
  • During a second Trump term, Australia should: Prepare for an emboldened conspiracy theory community while continuing to act as a tech reform vanguard. They should increase monitoring and acknowledgement of the ripened conditions for recruitment and radicalisation online.

Long-term trends

For the increasingly active community of conspiracy theorists in the United States, 20 January 2021 will mark a point of radicalisation regardless who takes the oath of office on the West Front of the US Capitol.

Conspiratorial thinking is not a new phenomenon in the United States. However, a coalescence of factors has created the conditions for a conspiracy theory renaissance. These include:

  • Declining trust in institutions
  • An unconventional executive branch
  • Sweeping government powers during the pandemic
  • Lockdowns and increasing isolation
  • Declining personal social and economic outcomes
  • An historic partisan divide
  • The militarisation of disinformation by nefarious foreign and domestic actors

With these factors in play, the global ecosystem of conspiracy theories has been edging closer to something akin to singularity, with a theory dubbed “QAnon” subsuming other prominent movements like anti-vax and anti-5G. QAnon posits: an alleged deep state; a pseudo-religious geopolitical reckoning; a global cabal of paedophiles run by Washington, Hollywood and Silicon Valley’s elite; and the direct intent of President Trump to blow it all apart. Constituents believe these claims in varying degrees but agree broadly that a deep state exists, and exploits children. The malleability of the theory and its growing army of content creators make it a distinctly pertinent and easily hijacked force.

QAnon, which arose in US politics during the Trump administration,[^106] will not retreat should the president lose power. Rather, the disenfranchisement of Trump could drive adherents towards desperate actions. In equal measure, the success of President Trump, after a campaign which has amplified the QAnon conspiracy theory, could validate and embolden followers towards dangerous vigilante and retributive actions against an extremely broad segment of enemies. In addition, the volatile conditions gripping the world, as well as the drastic increase in internet use,[^107] have sharpened the recruitment tools of those who exploit conspiracy theories for profit, particularly far-right groups.[^108]

Given the environment of contested truth that has already engulfed this election, these forces will be strengthened in 2021 under any scenario. This will lead to intractable dilemmas in the functioning of government itself, let alone the implementation of any potential coronavirus vaccine.[^109] In the age of social media, national borders cannot contain the spread of dangerous conspiratorial thinking.

During the 2016 election, hostile foreign forces infamously manipulated social media to inflame social tensions in the United States. Online conspiracy theories are an efficient vehicle for malicious actors to spread disinformation and cleave these already entrenched divisions even further. Russia has already been linked to campaigns to aggressively spread QAnon.[^110]

It is pertinent for governments around the world to react to this emboldened conspiracy theory landscape as not only a threat to national security but also as a social crisis.

Blue book

What changes under Biden

Biden winning means Trump has lost. As plain as this point seems, the thought itself is unfathomable to the core constituency of QAnon. The theory posits that it is President Trump’s destiny to be in the White House and unshackled during a second term to combat global forces from within. During the 2020 campaign, Joe Biden has been nefariously depicted as a central antagonist of the “deep state” in online fora and even by Eric Trump as a paedophile.[^111] From the perspective of the proselytised, the replacement of Donald Trump with Joe Biden will be abhorrent.

Every failure of the United States to curtail the development of a weaponised conspiracy theory landscape will be to Australia’s detriment. For the most dedicated followers, the “deep state” comfortably stretches across the Pacific and controls the machinations of Canberra.[^112] Further disenfranchisement is a dangerous state of play when conspiracy theorists are involved. There are already scores of QAnon supporters who, so exasperated by the lack of attention their cause has received, have resolved to take matters into their own hands.[^113] The threat for the United States and Australia is that of further vigilantism born of desperation. There is reason to believe that a Biden-Harris administration would underestimate this threat or not take decisive enough action to combat it.

Anti-fascism demonstrators gathered to counter-protest a rally held by far-right, extremist groups in Portland, Oregon, August 2019
Anti-fascism demonstrators gathered to counter-protest a rally held by far-right, extremist groups in Portland, Oregon, August 2019
Getty Images

In April 2009, a Department of Homeland Security (DHS) memo warned that post-GFC economic conditions, the hardship faced by returned servicemen, and the first black president created conditions ripe for a surge in right-wing domestic terror.[^114] When the memo was leaked, Republicans and veterans expressed outrage and accused the Obama administration of labelling Republicans as terrorists. The Obama-Biden administration quickly bowed to political pressures and stunted the monitoring of far-right-wing domestic terror such that by 2010, the number of DHS analysts working on these threats shrunk from six to zero.[^115] According to the Center for Strategic and International Studies, a US think tank, right-wing extremism accounted for two-thirds of domestic terror attacks and plots in 2019 and more than 90 per cent between January and March 2020.[^116]

A Biden-Harris administration faces a similar political challenge. Conducting the necessary vivisection on conspiracy theories, QAnon and how they are feeding back into patriot and militia movements will require a forthright assessment of the role of those who have encouraged, enabled, and emboldened them. It is highly likely that Republicans who have espoused QAnon content will be elected to Congress in November.[^117] If a Biden administration conducts the frank assessment required in 2021, powerful conservative voices will construe these actions as measures of political retribution, accuse the administration of defending sex offenders and decry the collapse of the Biden campaign’s message about healing the nation. Whether Biden, this time himself behind the Resolute Desk, will yield to attacks of this type will be a major test of his administration.

Effectively combating the scourge of QAnon also requires holding Silicon Valley’s feet to the fire. Facebook, Twitter, YouTube, Instagram and a host of other social media platforms all bear responsibility for hosting, and even promoting conspiracy theories to broad audiences.[^118] Armed with the powers of witness compulsion and legislating, Congress is best positioned to enforce responsible tech conduct beyond simple fact checks and labels on posts. Clear executive leadership is important, which Trump’s failure to act has proved. Biden has advocated for the removal of Section 230 of the Communications Decency Act,[^119] which protects online publishers from liability for the posts of users — a sweeping move which would have far-reaching consequences across the internet and warrants clarification. On the other hand, big tech enjoyed the favourable treatment it received during the Obama-Biden administration and has emphatically welcomed the addition of Harris to Biden’s ticket. While anti-trust hearings will naturally dominate headlines, Department of Justice appointments and hearings concerning the editorial responsibility of social media platforms will have vast ramifications in battles Australia is already fighting.

It is unclear that the Biden campaign grasps the social scale of this crisis. Belief in QAnon is already effectively tearing families and relationships apart, including rendering parents ineffective and radicalised. Biden himself has dismissed QAnon as “embarrassing” and the Biden platform does not directly address conspiracy theories, merely nodding at the need for the restoration of truth, requiring “moral leadership."

What Australia should do

If the Biden campaign has a comprehensive plan to deal with this crisis, it is well hidden. Australia will feel the sense of loss among conspiracy theory networks if Trump is defeated and should not wait for a Biden plan to emerge to combat the intractable and activated problem of QAnon and the weaponised conspiracy theory landscape.

Stewards of the alliance should use the Biden campaign’s ambitions for the restoration of global democracy to elevate conversations about how undemocratic and dangerous forces spread online. This dialogue should include seeking clarification about Joe Biden’s impulse to repeal Section 230 and advocating a happier medium that holds big tech responsible, but which does not impose impossible burdens on small and innovative platforms.

Stewards of the alliance should use the Biden campaign’s ambitions for the restoration of global democracy to elevate conversations about how undemocratic and dangerous forces spread online.

Australia should consider how best to conduct inter-generational internet education beyond the classroom. Older generations of Australians who attended school before the personal computer revolution are increasingly online and lacking the basic tools to discern malicious information.

Australian agencies should continue to acknowledge that far-right-wing terrorism is a threat and one that is leveraging the pandemic, QAnon, and the conspiracy theory renaissance to actively recruit.[^120] Australians who have been radicalised by the far-right online have already committed mass-fatality terror attacks and ASIO reported recently that far-right-wing terror comprises as much as 40 per cent of its caseload.[^121]

The spread of conspiracy theories does not just pose a threat to Australia’s national security, but also to its social fabric. The consuming nature of an emboldened conspiratorial mindset can strain relationships and create immense collateral harm.[^122] As it stands, the best resources for concerned family members and friends in this regard are ad hoc online community forums which may contain misleading and damaging advice.[^123] A concerted effort is needed to work with deradicalisation and psychological experts to arm concerned parties with the tools they need to help their loved ones.

Red book

What happens under Trump

Throughout his personal and political life, Donald Trump has leaned into conspiracy theories when they seem to benefit him or a cause he cares for.[^124] There is a straight line that can be drawn through the Central Park Five, Obama birtherism, the anti-lockdown movement, coronavirus-origin speculation and Kamala Harris birtherism. Trump does not create these theories, but he amplifies and legitimises them for his own gain. This is exactly what he, and now the Republican Party at large, have done with QAnon.

A second term of a Trump presidency will affirm and embolden the followers of QAnon and allow a period of prolonged and largely unchecked growth. This will impede the uptake of an eventual coronavirus vaccine and will continue to erode democratic institutions and the value of expertise and evidence-based policymaking. These will all have substantial flow-on effects around the world and in Australia.

A woman wearing a QAnon hat with her baby listen to President Trump speak at the Mohegan Sun Arena, Pennsylvania, August 2018
A woman wearing a QAnon hat with her baby listen to President Trump speak at the Mohegan Sun Arena, Pennsylvania, August 2018
Getty Images

With President Trump re-elected to a second term, in defiance of the polls and much punditry, followers of various conspiracy theories endorsed by Trump will feel vindicated in their beliefs. The refusal of the president, and now the Attorney General, to condemn the violent actions of vigilantes on the right of the political spectrum helps legitimise followers of QAnon. The Department of Justice dropped charges against President Trump’s first national security advisor, Michael Flynn, who, as well as admitting to breaking the law for the president, recently took the QAnon variation on the oath of allegiance.[^125] These are not trivial developments. In fact, they imply impunity in exchange for actions of loyalty, but retribution for disloyalty.

The Trump administration and many Congressional Republicans have pressed big tech on facilitating an alleged anti-right-wing bias on social media networks.[^126] When they were offered the opportunity to hear from experts on disinformation and conspiracy theories, Republican members of the House Intelligence Committee declined.[^127]

What Australia should do

With the exception of a potential skirmish over a coronavirus vaccine — the implementation of which a Trump administration will bring some core beliefs of constituents into opposition — there’s no reason to believe the political affinities between Trump and QAnon will recede in a second term. Australia should prepare accordingly for an emboldened community of conspiracy theorists.

In the absence of cooperation with the administration on the spread of conspiracy theories, Australia should continue to lead on efforts to hold social media platforms responsible for dangerous content. Australia can expect the regulatory weight of other like-minded nations to join its push.

A Trump administration will continue to focus on tech reforms in its direct interests. In the absence of cooperation with the administration on the spread of conspiracy theories, Australia should continue to lead on efforts to hold social media platforms responsible for dangerous content. Australia can expect the regulatory weight of other like-minded nations to join its push.

Australia should consider how best to conduct inter-generational internet education beyond the classroom. Older generations of Australians who attended school before the personal computer revolution are increasingly online and lacking the basic tools to discern malicious information online.

Australia should acknowledge far-right-wing terrorism is a threat and one that is leveraging the pandemic, QAnon and the conspiracy theory renaissance to actively recruit. Australians who have been radicalised online have already committed mass-fatality terror attacks and ASIO reported recently that right-wing terror comprises as much as 40 per cent of its caseload.[^128]

The spread of conspiracy theories does not just pose a threat to Australia’s national security, but also to its social fabric. The consuming nature of an emboldened conspiratorial mindset can strain relationships and create immense collateral harm.[^129] As it stands, the best resources for concerned family members and friends in this regard are ad hoc online community forums which may contain misleading and damaging advice.[^130] A concerted effort is needed to work with deradicalisation and psychological experts to arm concerned parties with the tools they need to help their loved ones.