Trump’s Iran Policy: Economic Risks & Australia’s New US Ambassador

A group of senior Australian public servants held a farewell dinner for the nation’s incoming ambassador to the United States on Thursday night, as Canberra braces for a potentially turbulent period in its most critical strategic relationship.

The dinner, held at the Chairman and Yip restaurant in Canberra, was convened to mark the departure of outgoing Defence Department Secretary Greg Moriarty, who will replace Kevin Rudd as ambassador to Washington on April 1st. The gathering took place against a backdrop of escalating geopolitical tensions and growing uncertainty surrounding the foreign policy direction of the United States under President Donald Trump.

The timing of Moriarty’s arrival in Washington coincides with a significant shift in the international landscape, particularly following the recent escalation of conflict in the Middle East. The US-Israeli war in Iran, now entering its third week, is already prompting a reassessment of Australia’s economic forecasts and raising concerns about potential disruptions to global energy markets. Treasurer Jim Chalmers held emergency talks with the Council of Financial Regulators on Friday to address the economic fallout, with inflation potentially reaching as high as 5% this year and a possible 0.6% hit to GDP in 2027, equating to a $16.5 billion economic cost.

The Albanese government is likewise considering a potential 25% export levy on gas, mirroring calls from the Greens and independent Senator David Pocock, as soaring prices create a potential revenue windfall. Growing fuel shortages are also impacting domestic industries, with allegations of price gouging under investigation by the Australian Competition and Consumer Commission (ACCC).

Adding to the complexity, President Trump has drawn criticism for a perceived lack of consultation with allies before launching strikes against Tehran. In a social media post, Trump appeared to dismiss the contributions of NATO members, as well as Australia, Japan, and South Korea, to efforts to secure the Strait of Hormuz, a vital shipping lane for global oil supplies. “The United States has been informed by most of our NATO ‘Allies’ that they don’t want to get involved with our Military Operation against the Terrorist Regime of Iran, in the Middle East,” the post read. “We no longer ‘demand’ or desire, the NATO Countries’ assistance – WE NEVER DID! Likewise, Japan, Australia, or South Korea.”

The situation was further complicated by a meeting between Trump and Japanese Prime Minister Sanae Takaichi on Friday, where Trump reportedly joked about Japan’s attack on Pearl Harbor. According to the Financial Times, Japanese officials had instructed reporters that Takaichi would adopt a highly deferential approach, offering flattery and investment promises to distract from Japan’s reluctance to send military vessels to the conflict zone.

Coalition frontbencher Andrew Hastie described Trump’s social media comments as “petulant” and a reflection of his character, rather than a genuine assessment of Australia’s commitment. Prime Minister Anthony Albanese, breaking with his usual reticence on Trump, publicly urged the US and Israel to bring hostilities to a swift conclusion, arguing that the initial justifications for the war – degrading Iran’s nuclear program and curbing its missile capabilities – had already been achieved.

Albanese indicated that Trump would ultimately determine the war’s duration, expressing hope for a return to “normal” international relations. He acknowledged Trump’s sensitivity to domestic criticism and the need to project an image of success, particularly with midterm congressional elections looming in November.

The conflict also poses a direct security risk to Australian personnel. An Iranian projectile struck near Australia’s headquarters at the Al Minhad airbase in the United Arab Emirates this week, causing damage to accommodation and a medical facility. Any Australian defence personnel becoming casualties, even in a defensive role, would present a significant political challenge for the Albanese government, which quickly endorsed the initial US and Israeli bombings.

Despite the cheerful atmosphere at the Canberra farewell dinner, Greg Moriarty is set to inherit a challenging posting in Washington, navigating a complex and unpredictable relationship with an increasingly assertive and unconventional US administration. The appointment of the long-serving defence bureaucrat, described as “level-headed and respected”, signals a preference for stability and experience as Australia seeks to manage its alliance with a volatile partner.