Prime Minister Malcolm Turnbull came up with a win over the weekend, negotiating an Australian exemption to US President Donald Trump’s tariffs on steel and aluminium. The key question is, at what cost? And where to now, given the global trading system is destabilised?

To his credit, Turnbull has been level-headed about Trump from the beginning: before the president was elected, then when he was arguing over our unprincipled refugee swap, and now in the face of a trade war. It was the right instinct, to play a very straight bat with such an unpredictable president, rather than playing to the crowd with intemperate or colourful commentary. And it has paid off for Turnbull – or at least saved him from the excruciating embarrassment of a slap in the face with a steel tariff just days after a cringe-worthy celebration of “100 years of mateship”. Turnbull once criticised then Prime Minister Julia Gillard for going over to the US “doe-eyed”, spouting unctuous “Americans can do anything” rhetoric. Turnbull did not do much better on that score, but at least he did stand up to Trump in that infamous first phone call, playing the businessman-to-businessman card for all it was worth, and now he has managed to keep Trump to his word on exempting Australia from the US tariffs.

No doubt Opposition Leader Bill Shorten regrets saying Trump’s views were “barking mad on some issues”, but that won’t stop the government reminding him of it, as Trade Minister Steve Ciobo did on Insiders yesterday. It’s a fair point.

But if Turnbull wants to claim credit for his negotiations with Trump – and The Oz and The AFR have both run congratulatory fly-on-the-wall stories, downplaying the likelihood that the clincher was our trade deficit with the US – we are entitled to know what was negotiated. The president’s tweet referencing a “security agreement” was nervous-making, and Turnbull was not especially convincing when he said it was about the paperwork. Is there some quid pro quo? Can we see the transcript of that call as well? It looks like geopolitics on the fly.

Trade expert Dr Patricia Ranald, honorary fellow at the University of Sydney’s Department of Political Economy and coordinator of the Australian Fair Trade and Investment Network (AFTINET), says Trump is raising tariffs unilaterally, under the national security exception to the World Trade Organization’s rules, and if the US is challenged in the WTO by Europe or China, the US will lose. Not that Trump would care about the WTO rules, necessarily: he has downgraded US participation in the WTO – for example, by refusing to appoint replacement arbitrators to its dispute panels.

The one good thing about Trump as disrupter, Ranald says, is that he has reminded everyone that trade agreements are political decisions, made by governments, and “free trade theory is not God’s own truth”. Neoliberal theory that all tariffs should be reduced to zero right now, and all trade barriers eliminated right now, simply doesn’t work for developing countries at all, and does not reflect the history of industrialisation in developed countries or tiger economies, which has generally taken place behind tariff walls.

By raising tariffs unilaterally, Ranald says, the US is simply throwing its weight around, and destabilising the global trade system. While AFTINET is no fan of the WTO, it’s better than no rules at all – especially for smaller economies like Australia’s – and Ranald has called for a fairer, more progressive rules-based system. We have a free trade agreement with the US – it was designed to prevent any repeat of the imposition of lamb tariffs in 2000 – so how could they now turn around and impose a tariff on our steel anyway? The erratic US president is undermining the global trading system. Economists are sounding cautious: former Austrade chief Tim Harcourt says the exemption will be cold comfort if Trump’s protectionist move ends up in retaliation and a global trade war, while Ross Gittins argues that the PM should take the opportunity of the looming ASEAN meeting to work with our neighbours to keep markets open. We should not be patting ourselves on the back too much.

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