Australian firms may face 'intense competition': RBA

Reserve Bank of Australia (RBA) deputy governor Andrew Hauser said the effects of US President Donald Trump's tariffs may increase competition for Australian firms operating in China.

Hauser said he visited China just after Trump's "Liberation Day" tariffs and while the extent of then was a shock, the sentiment was "pretty positive".

"The Chinese economy was seen as picking up in early 2025; China felt it had a strong hand in responding to the economic impact of tariffs; and Australian companies in China saw opportunities amidst the risks," Hauser said.

However, Hauser noted that while tariff settings have already "moved on dramatically", he suggests they will change further - whether up or down.

"We'll soon start to see data on just how the existing tariffs - still high by historical standards - are affecting the Chinese and global economies," he said.

"Some of the judgements may prove wide of the mark - the tolerance for bearing economic costs may prove lower; domestic stimulus may prove to be harder to deliver; and so on."

Hauser said while it is not yet known how the situation between China and the US may unfold, Australian firms may be collateral damage.

"An example of this is the possibility that Australian firms might in time face more intense competition, at home and overseas, from Chinese firms discounting output diverted from US markets," he said.

"It's unclear how big an effect this would be, given the limited overlap between Chinese and Australian outputs. But it's clearly on the minds of others in the Asia-Pacific region."