The European Union and Australia have finalized a trade agreement, allowing Western countries to hedge against the risks posed by the United States.

The European Union and Australia reached a comprehensive trade agreement on Tuesday. Against the backdrop of increasing global geopolitical uncertainty, this is the latest move by American allies to realign their economic relations.

The agreement, which took nearly eight years to negotiate, will eliminate most tariffs that both sides impose on each other’s goods and will allow the EU to gain more access to key mineral supplies from Australia.

Under this long-awaited trade agreement, the EU will eliminate about 98% of tariffs on export goods from Australia, including wine, dairy products, wheat, barley, and seafood. In exchange, Australia will remove tariffs on over 99% of EU goods, primarily covering dairy products, automobiles, and chemical products.

European Commission President Ursula von der Leyen stated on the Commission’s official website on Tuesday: “We are sending a strong signal to the world that in times of turmoil, friendship and cooperation are most important.”

She added: “Although the EU and Australia are geographically distant, our worldviews are highly aligned. With this vibrant new security, defense, and trade partnership, we will deepen our connections.”

Earlier this week, European Commission President von der Leyen met with Australian Prime Minister Anthony Albanese to finalize negotiations that began in 2018.

In 2023, talks stalled due to disagreements: Australia sought to expand its export quotas for lamb and beef to the EU, while the EU aimed to broaden access to key minerals from Australia and reduce tariffs. Subsequently, influenced by the Trump administration’s increase of U.S. tariffs, both sides accelerated the negotiation process.

In the next decade, EU exports to Australia are projected to grow by as much as 33%, with annual exports rising to €17.7 billion (approximately $20.5 billion). By 2024, the EU’s trade surplus with Australia in goods will reach €28 billion.

The EU primarily imports minerals and agricultural products from Australia, while exporting machinery, electrical equipment, transport equipment, and chemical products to this Asia-Pacific nation.

Almost all manufactured goods and mineral resource exports from Australia to the EU will enjoy zero import tariffs. A statement from the Australian government indicates that investment from the EU is expected to grow by over 87%—in 2024, the EU will be Australia’s second-largest source of foreign investment.

The agreement includes a bilateral safeguard mechanism: if a surge in Australian imports causes harm to the EU market, the EU may take measures to protect sensitive European products and their producers.

Key Mineral Supply

The EU will secure a stable supply of key raw materials from Australia, such as aluminum, lithium, and manganese, which are critical to the overall economic security of the EU.

The EU stated in a declaration: “The current trade in key raw materials is highly susceptible to sudden economic or geopolitical shocks,” emphasizing that building partnerships with “reliable partners” is crucial for safeguarding its supply chains.

Security Cooperation

Australia and the EU have committed to strengthening cooperation in crisis management, maritime security, and disruptive technologies such as artificial intelligence.

Diversifying Trade Relations

Over the past year, the EU has actively promoted new agreements with trade partners, aiming to diversify economic relations, defense, and military security partnerships—areas that are threatened by the increasing unreliability of the United States.

U.S. President Donald Trump not only imposed high tariffs on American allies, undermining the rules-based trading system, but also launched attacks on Venezuela and Iran without prior notice to major allies, straining Washington’s relationships with many traditional allies.

Leaders of Western countries, especially Canadian Prime Minister Mark Carney, have called for “medium powers” to work together to curb the rise of unilateralism from global superpowers.

On Tuesday, von der Leyen addressed the ongoing conflicts in the Middle East (which have driven up global oil prices) in the Australian Parliament, stating: “The geopolitical and economic shocks brought to our people by the conflict in Iran affect everyone.”

This regional conflict has reignited European concerns over energy supply tightness and inflationary impacts—Europe is heavily reliant on imported crude oil and natural gas.

Earlier this year, the EU reached a trade agreement with India to eliminate or reduce tariffs on over 90% of traded goods; prior to this, the EU had completed trade agreement negotiations with Indonesia last year.

On Monday, the European Commission announced that a trade agreement with the Southern Common Market (Mercosur), including Argentina, Brazil, Uruguay, and Paraguay, is expected to take temporary effect starting in May.