Federal Treasurer Jim Chalmers believes Australia’s economy will be able to withstand global financial shocks stemming from a second Donald Trump US presidency.

In a speech to the Australian Institute of International Affairs on Monday, Chalmers will say Australia is likely to fare better than other nations in handling potential economic pressures.

Trump has proposed significant tariffs on imports into the US as part of his second term agenda.

But Chalmers says Australia is prepared for such a scenario should the measures be implemented.

“We should expect a small reduction in our output and additional price pressures, particularly in the short term,” he will say.

“But specific features of the economy, like a flexible exchange rate and independent central bank, would help mitigate against some of this.”

Chalmers will say the impact globally to the proposed tariffs from the US would be much more substantial, according to Treasury modelling carried out before the US election.

“The timing of this, and the responses and ramifications that might follow – what economists call second-round effects – are difficult to predict,” he will say.

“But we wouldn’t be immune from escalating trade tensions that might ensue. This is consistent with the views expressed last week by the Prime Minister.”

Australia was able to negotiate significant exemptions to tariffs imposed by the US during the first Trump term.

Chalmers believes Australia’s diplomatic efforts had a key bearing on economic policy.

“Economic policy and foreign policy have always been interlinked but now they’re almost indistinguishable,” he will say.

“In this uncertain world characterised by economic vulnerability and volatility, our foreign policy team is a team effort which brings economic benefits.”

The speech comes ahead of Prime Minister Anthony Albanese travelling to South America later in the week for talks with world leaders at the APEC and G20 summit.

The summits will be the last time Albanese will be face-to-face with outgoing US President Joe Biden.

Anthony Albanese will have a final meeting with Joe Biden later this week. Photo: AAP

Chalmers will say that despite the outcome of the US election, the relationship with America will remain strong.

“Our relationship with America under presidents and prime ministers from all sides is strong and enduring.

“Of course we expect the incoming US administration to bring a different suite of policies, and we are confident in our ability to navigate that change, as partners.

“Nobody should underestimate our ability to make it work. We are well placed and prepared.”

Clean energy momentum strong

Months of strong investment have put Australia’s energy transition back on track, the latest industry data shows, with momentum not expected to be upset by Trump’s return to power.

Australia recorded the best result for clean energy investment since late 2022, according to a Clean Energy Council report released on Monday.

Chief executive Kane Thornton said investment would continue regardless of the “Trump factor” or whether the US was in or out of international climate agreements.

Some 1400 megawatts or $3.3 billion worth of new large-scale renewable energy generation projects reached financial commitment from July to September, the Quarterly Renewables Report revealed.

Investment in energy storage projects, critical for the growth of generation and grid stability, hit a record 1235 MW/3862 MWh in the quarter – up 95 per cent on the same period in 2023.

There was also a rebound for onshore wind projects, with 1758MW of new capacity committed in 2024 to date.

Thornton said the increasing activity indicated challenging economic conditions were beginning to ease, with investment in the September quarter alone surpassing all of 2023.

Based on projects under construction, the renewable energy share of Australia’s energy supply is expected to be almost half by the end of 2025.

He said investors had put $40 billion into renewables and storage since 2020, and a strong July to September, if sustained, would put Australia back on track to achieve 82 per cent renewable energy generation by 2030.

Thornton said there was a global shift in clean energy investment, equity and people to the US, including out of Australia, when Biden’s administration passed the Inflation Reduction Act in 2022.

“If things were to slow down in the US then we could expect, all other things being equal, Australia to become more attractive and more of that to come back into Australia,” he said.

“But there’s an enormous amount of investment occurring into Republican states across the US and there are still very powerful drivers around investment in renewables in the US, as there are in Australia,” he said.

Call for bold climate target

Ambitious targets for reducing carbon emissions can’t be ignored, Australia’s climate change minister says, ahead of the UN’s climate summit.

World leaders and experts are coming together for the COP29 summit in Azerbaijan, which begins on Monday.

The timing of the summit comes just days after incoming Trump signalled he would pull America out of the Paris Agreement climate targets.

Climate Minister Chris Bowen, who will represent Australia at the two-week summit, said the country was punching above its weight on the world stage in reducing emissions. But he said the world’s nations needed to aspire to higher targets.

“Maintaining momentum and maintaining high ambition at COP cannot be taken for granted. A COP with a less than ideal outcome is not a good thing,” he said.

“We will be arguing for strong language on ambition, with the Duabi consensus as the absolute baseline. The signals we send are important, as a government and as an industry.”

The Dubai consensus was the agreement signed on to by leaders at the previous COP summit in the United Arab Emirates, which called for a transition away from fossil fuels to allow for net-zero emissions by 2050 to be reached.

Bowen said while the annual climate summits had done large amounts of work in reducing emissions, more needed to be done.

“For the third year in a row, we’ve been asked to take a significant role in the COP proceedings. For 10 years Australia had no role and no reputation in the international arena,” Bowen said.

“Our role at COP now is a signal that the international community has acknowledged the massive shift in approach between those who came before us, and our government.”

Australia has also signalled it would look to host the COP31 summit in 2026, with a decision expected to be made at this year’s event.

South Australia’s government wants to host the summit.