Contributed by Jim Hayes

The escalation of sanctions across the world as the major weapon of foreign policy by the Trump administration in the United Sates, will bring harm to itself and stands to have a serious impact on Australia.

Publicised highlights are the 10 percent tariff on Chian’s exports. There are the heavy sanctions on Russia. 25 percent to Canada, and similar for Mexico. But there are many other countries that some form of sanctions applies to, like much of Europe, Africa, and unfavoured countries in South America and the Caribbean.

Australia has not had sanctions imposed. But there are restrictions on what can be exported to the United Sates. Sanctions are used to impose political demands on other countries, and Australian governments have long been compliant to Washington’s demands.

This does not mean escaping the fall out. Expect retaliation. A notable example is that China has just hit back by cutting exports to the United Sates of rare earths like tungsten, tellurium, bismuth, indium, and molybdenum. Most people have probably never heard of some of them. But they are essential to make the mobile phones, smart televisions, and other high-end technology, that we use. China has much of the world’s supply, and this mans a technological backward step for the United States and potentially its allies.

Australia’s pro-United Sates foreign policy is already impacting on Australian exports of iron ore. This stands to get worse with the expansion and consolidation of the BRICS alliance, Headed by China and Russia, and also including other major and smaller ones. Teir focus is on developing trade among its members and on better conditions. They make up most of the world. Australia is with those in the outer. Washington escalating the use of sanctions can only accelerate this. By being partisan to Wahington, Australia faces growing international isolation.

Another effect is, and we have proof of it already, is that the sanctions regime contributes to pushing down the value of the Australia dollar, because imports become more expensive. This in turn raises the cost of living and puts pressure on the Australian government to cut interest rates. Lower interest rates mean investors are less keen on the Australian currency as an asset. Demand for it goes down, and its exchange value falls along with this.

Thep potential is far worse. Washington’s sanctions, if they go too far, threaten the United States economy most of all. It will increase the costs of American producers, cut out potential export markets, raise the cost of living for Americans most of all, for businesses to close and cost an enormous quantity of jobs.

Australia’s economy is closely welded to that of the United States. Most of the well-known brands operating here are American multinationals, and it goes much further than this. This extends to the mining industry and the financial system operating in Australia and through which Australia conducts foreign trade is American controlled.

The decline in the American and its corporations will take place in Australia too. If this is where we are heading, expect many other countries to go towards BRICS and the alternative it offers. Will Australia then be left in the cold?

At worst, an overblown sanctions regime can contribute to the meltdown of the global economy. Everyone will be affected if this happens.

It would be much better for Australia to chart our own course. The best protection is a significant decoupling from the American economy and taking control of our own. The barrier at present is not so much economic as it is political. It can happen if there is a will. Moving in this direction would mean establishing a good relationship with all and being a target of none. Perhaps one day Australia may consider applying to join BRICS. Its member nations are the growing part of the global economy and therefore the future.