Economic wellbeing plummets amid global turmoil

Only 51 per cent of Australians said they felt “safe” or “very safe” when thinking about the state of the world, a Lowy Institute poll found in March.

The actions of US President Donald Trump had sparked concern amongst Australians, the survey revealed. Only 36 per cent of Australians trusted the US to act responsibly, while 68 per cent were pessimistic about the next four years with Trump as president.

“Australians are clearly unsettled by what they’ve seen of the second Trump administration, with almost two-thirds (64 per cent) now holding little to no trust in the United States to act responsibly — the lowest level in the history of the Lowy Institute Poll,” the Lowy Institute’s executive director, Dr Michael Fullilove, said.

“At the same time, the public continues to separate the person of the president from the institution of the alliance. Most Australians (80 per cent) still believe the Australia–US alliance is important to our security — one of the most consistent findings in the history of the Institute’s polling.”

Geopolitical woes aside, Australians’ confidence in the economy has fallen to lows only recorded during the pandemic. Only 52 per cent of respondents said they felt optimistic about Australia’s economic performance over the next five years.

Erratic tariff announcements, retaliation from major economies and cost-of-living pressures had weighed on Australians’ medium-term economic sentiments, the Lowy Institute said.

While the survey was taken before the sweeping 2 April ‘Liberation Day’ tariffs and the ensuing US-China trade war, sentiments had already been dampened in March by the initial trade turmoil, including US tariffs on Canada, Mexico, and steel and aluminium imports.

In a more uncertain geopolitical environment, the Lowy Institute also identified high support for boosting domestic manufacturing in Australia.

A majority (83 per cent) of respondents believed that Australia should produce more goods domestically, even if they would cost more. Only 16 per cent believed Australia should source all goods from wherever they cost less.

The Lowy Institute noted that the government’s Future Made in Australia initiative had represented a significant shift towards domestic manufacturing. It was in contrast to Australia’s usual reliance on market forces to determine what Australia produces, which has been the dominant system since the deregulation of the economy in the 1980s, the report said.

The $23 billion policy sought to build Australian manufacturing capability in clean energy, green metals and fuels, and minerals processing, the think tank said. At present, China has dominated critical mineral supply chains and the production of clean energy technologies.

Australians’ broad support for domestic manufacturing aligned with previous Lowy Institute surveys, which found that 70 per cent of Australians thought Australia should prioritise running supply chains through friendly countries, even if it meant higher prices.

Amid a charged geopolitical environment, the poll identified numerous threats which were on Australians' minds.

Over the next 10 years, Australians perceived cyberattacks from other countries (65 per cent), a military conflict between the US and China over Taiwan (61 per cent) and a severe downturn in the global economy (58 per cent) to be the top three critical threats to Australia’s vital interests.

Climate change (54 per cent) held steady as a perceived threat, but the report noted that cost of living and geopolitical concerns had trumped climate fears in 2025. Regardless, most Australians still backed the rollout of renewable energy.

“As Australia moves towards net zero emissions, three-quarters (75 per cent) of Australians see renewables playing a ‘major role’ in the 2050 energy mix, compared to far fewer that envisage a major role for nuclear (37 per cent) or coal (24 per cent),” Ryan Neelam, the Lowy Institute’s public opinion and foreign policy program director, said.