As he leans back in his chair in a Perth hotel lobby, James Carouso cuts a relaxed figure.

A career diplomat with a background in trade and finance, the acting US Ambassador to Australia is unruffled as he talks to WestBusiness about topics from the world under Donald Trump to the state of WA’s economy.

But ask him about Australia’s relationships with the US, its most important ally, and China, its biggest trading partner, and whether it might one day have to choose between them and very quickly another side emerges.

“What focuses my mind is how often this question comes up,” Mr Carouso bristles. “It is something I have trouble really understanding.

Camera Icon Professor Craig Valli from the ECU Security Research Institute gives the acting US Ambassador to Australia James Carouso a tour of one of the Institute’s laboratories. Credit: Megan Powell\The West Australian

“The US-China trade and investment relationship actually dwarfs that between Australian and China.

“We co-operate with China on everything from Iran and Somalia to the environment, even North Korea to some degree. And we disagree with them on South China Sea.

“So they are our competitors and co-operators across the board. But that doesn’t affect our trade and investment relationship in a critical way.

“I fail to understand why it’s a choice for Australia.”

The unusually blunt language from the US charge d’affaires comes at a time of increasingly complex international relations, with trouble on multiple fronts.

In the Middle East, America faces a prolonged fight with Islamic State, while in Asia it is having to contend with a more provocative North Korea.

Underlying everything is the rising economic and military might of China.

I fail to understand why it’s a choice for Australia.

Mr Carouso says while Australia’s trade relationship with China is valuable and growing, it pales in significance compared with its economic ties to the US.

A recent report by the Committee for Economic Development of Australia noted the US was by far Australia’s biggest partner in foreign direct investment — both inbound and outbound — beating China by a factor of more than seven to one.

Despite these numbers, Mr Carouso said many Australians did not appreciate the extent of the economic relationship — something he attributed in large part to America’s failure to promote it. “There is a sense among most Australians that the US relationship is 99 per cent military,” he said.

“People don’t realise the enormous bilateral trade investment relationship. Our countries do business so much with each other. But most Aussies don’t even think about it ... it’s all about China or Japan.”

For that reason, Mr Carouso was in Perth to lead a delegation of US businesses ranging from technology providers Cisco and IBM to engineering firms KBR and AECOM.

He said WA was not unlike the US State of Colorado, which had once been reliant on mining but had widened its base to include industries such as technology.

But he said WA still had its work cut out to take the next step in its economic evolution.

In the meantime, it faced increased competition from the US for its beef and LNG exports after America concluded a surprise free trade deal with China.