In the recently presented Federal Budget, Treasurer Jim Chalmers highlighted significant economic uncertainties, particularly the looming threat of a global trade war linked to US tariffs.

Global growth is projected to slow further, potentially reaching levels not seen since the 1990s, with forecasts indicating just 3.25 percent growth annually for the next three years.

Should Australia retaliate with its own tariffs, the economic impact could nearly double, with Treasury cautioning that actual effects might be underestimated due to retaliatory measures from other countries.

The Budget papers describe the economic outlook as 'uncertain and volatile,' indicating that escalating trade tensions could negatively impact domestic investment and employment.

Chalmers noted that tariffs imposed by major trading partners, especially those from the US, could lead to increased import prices, temporary inflation, and reduced economic growth in Australia.

Treasury modeling suggests that these tariffs could result in a 0.1 percentage point reduction in Australia's economic growth, alongside a similar increase in inflation.

Despite expectations for a soft landing for the Australian economy, persistent global risks such as trade disruptions, slowing growth in China, and ongoing conflicts in Europe and the Middle East remain a concern.

According to Treasury forecasts, the indirect effects of tariffs on trade between Australia, China, and the US could be nearly four times greater than the direct effects on Australian GDP.

Chalmers expressed concerns about a 'volatile and unpredictable' global economy, shaped by the lingering effects of the pandemic, inflation, and the threat of trade wars.

Despite these challenges, Dr. Chalmers asserted that Australia is well-positioned to navigate global economic pressures, emerging from inflation in a better state than many advanced economies.

To bolster local producers amidst these challenges, the Budget announced a new $20 million 'Buy Australian' campaign aimed at encouraging consumers to purchase Australian-made products.

Warnings from industry experts in Western Australia suggest that the repercussions of US tariffs on China may significantly affect Australia more than previously anticipated.