US President Donald Trump's election campaign promised an America-first trade policy that included new taxes on foreign imports.
Professor Warwick McKibbin, an expert on macroeconomics at ANU, says a sudden hike in tariffs would likely lead to retaliation and a global recession.
He doesn't think that will happen, because Trump's economic advisors will caution him against it. But he does predict a more gradual raising of barriers and protective taxes that could cause a trade war in three or four years.
Watch: Professor Michael Wesley at the Press Club
“I think although a trade war is unlikely in the near term, I think we're setting up a set of macro policies which really push in the direction of a potential response," Mr McKibbin said.
Professor Michael Wesley, an expert on the Asia Pacific at ANU, said he expected Malcolm Turnbull to try to forge closer ties with the Trump administration.
But he said Australia's approach to the US alliance should depend on how long Mr Trump - and those who share his protectionist approach to trade - remain in power.
"If he's a flash in the pan, if he's only around for four years, my counsel would be keep your head down and just rely on those underlying structures of the alliance to take us through,” Mr Wesley told the Press Club.
“If he's a longer term trend then we've got some much more profound questions to ask ourselves about how close we want to be to the United States in the long-term future."
