And Trump took the first decisive action on this agenda on Friday night after months of threats and bluster. The President had promised to impose punitive US tariffs on imports from China unless Beijing made dramatic changes to its rules on trade and investment. With negotiations failing, the first ever US tariffs aimed solely at China took effect at midnight on Friday, Washington time. A 25 per cent import tax is now in place on aircraft parts and farm ploughs among a long list of US imports from China. Loading The value of imports subject to the new tariff is about $US34 billion ($46 billion), with the Trump administration considering applying it to a further $US16 billion worth, plus the possibility of much more to come if China doesn't capitulate. Trump had put "America first". China's Commerce Ministry said that Trump had launched "the largest trade war in economic history". It retaliated with tariffs on imports of American soybeans, cars and whiskey, among other products.

Steve Bannon, rather than resisting Beijng's rhetoric, embraces it: "We just started a war on Friday night." He was fired after the first seven months of the administration amid tensions in the White House, with Trump saying his former Svengali had "lost his mind" apparently because he'd made remarks critical of some of the Trump family. Yet Bannon is a staunch defender of the President. American media have reported that they remain in regular contact; Bannon says they talk through their lawyers. With the Mueller investigation into the Trump campaign and suspected collusion with Russia, discretion is the better part of valour, it seems. Bannon exults: "I can't emphasise Friday night enough - it was the day that President Trump stood up for the American worker." China has slapped tariffs on US soybeans. Credit:Bloomberg Some US firms disagree. American companies that depend on Chinese components to make their products are complaining. For instance: "The tariffs put us at a disadvantage relative to competitors in Japan and Germany," hydraulics manufacturer Austin Ramirez of Husco International told The Wall Street Journal.

But Bannon says that the tariffs are merely emblematic of a much grander confrontation with China: "It's not about tariffs and math, it's about bringing manufacturing jobs back from China, it's about the dignity of workers, self-worth and community. "Why do you think states like Wisconsin and Michigan and Ohio and Iowa that haven't voted Republican in living memory voted for Donald Trump? Because of China." [This assertion is factually incorrect. Several Republican presidents in living memory have won these states, including Richard Nixon, Ronald Reagan, George Bush snr and George Bush jnr - Eds.] Indeed, according to Bannon, "Trump's rise was predicated on two things - the financial crisis in 2008 that lit a match on the populist movement, and the rise of China as it profited from the West while Western elites looked the other way" because the elites, too, were making money from China even as workers suffered layoffs as a result of China's industrial success. Donald Trump with then-national security adviser Michael Flynn and chief strategist Steve Bannon during a phone call with Australian Prime Minister Malcolm Turnbull in January. Credit:Bloomberg

But Australia's trade position is vastly different. While Trump bemoans America's enormous $US366 billion annual trade deficit with China, Australia earns a hefty annual surplus from the China trade. In fact, Australia generated a surplus of $35.5 billion from its merchandise trade with China last year and a further $13 billion from its trade in services with China, according to recent Australian statistics. Loading So how could Australia be what Bannon describes as "the canary in the mineshaft"? Because, he says, the struggle is not about trade in itself but about domination by the Chinese Communist Party. "Australia is an object lesson in what to avoid. People [in Australia] played by the rules. It came up gradually, and then it was there."

Chinese investment went into "natural resources, tech, then you have overseas Chinese putting money into politics and now you finally wake up", a reference to the bills now passed by the Parliament to curb foreign interference. "And you wake up and you say, 'hold on - who controls our economic base', because doesn't politics ultimately come off who controls the economic base?" "Because of Australia's example, it will not happen here in the US," says Bannon. "It will not be allowed to happen. People are woke." "You," he tells me, meaning Australia, "are the San Andreas fault between China and the West. These are the two great systems that have built up over 2000 years. You are the representative of Athens and the democratic Western tradition, and China is a Confucian totalitarian system. "The South China Sea is very quickly going to become the front line. The South China Sea will be the focus of an intense global crisis."

Loading Replay Replay video Play video Play video The US and its allies must be resolute in defence of freedom of navigation against relentless Chinese advances, he urges. And, while Bannon thinks of Australia as having fallen heavily under China's influence, he says Australia can recover because it has "the only people who can match the common sense, grit and determination year after year of the US". It's a view Bannon developed as a frequent visitor to Australia as a naval officer with the US Pacific Fleet in the 1970s, though he's a touch out of date with 10 years since his last visit. "I've said it many times, though I've never said it publicly, Australia and Italy are the centre of the two major political developments where the whole issue of the future of the nation state will be decided," according to Bannon.