Australian markets smashed through record highs after the United States and China signed the first phase of a trade deal that could put an end to more than two years of tension and hit local exporters.

Former prime minister Kevin Rudd, who was in the White House for the signing of the deal, said China's commitments to purchase more US goods were "phenomenally large" and posed a major risk to Australian agricultural exporters and the coal and liquefied natural gas (LNG) industries.

The agreement could see the US leapfrog Australia as the largest exporter of LNG as the $US200 billion ($290 billion) deal compels China to purchase energy, manufacturing and agricultural goods in exchange for the US cutting tariffs on $US110 billion worth of imports.

"Scott Morrison has to reassure the Australian public that we won't become collateral damage in this," Mr Rudd told The Sydney Morning Herald and The Age.