Why the global rush to make things locally matters for Australia

The world is quietly changing the way it makes and moves things, and Australians are about to feel the consequences.

Across the world, governments are looking inward, trying to reduce their reliance on imported goods and bring manufacturing back within their own borders. The most recent and dramatic example comes from the US, with Trump’s sweeping tariffs on imports aiming to protect American industries and jobs.

This new wave of tariffs has sent a clear message to global markets: governments are no longer prepared to fully rely on complex, fragile, and politically risky global supply chains. Instead, countries are turning inward, prioritising local production and supply security over cheap, overseas goods.

While this might sound like a US issue, it has serious consequences for Australian businesses and households.

 

Why in-house production is back in fashion

The logic behind tariffs is simple: tax imported goods so they become more expensive, forcing people and companies to buy local alternatives. In theory, this boosts domestic industries, creates jobs, and makes economies more resilient.

But in today’s world of global supply chains, where even a simple household appliance might have parts from a dozen countries, it is not so straightforward. Even products labelled Made in the USA or Made in Australia often rely on imported components, raw materials, and machinery. When tariffs hit those too, the cost of producing and buying everyday goods rises — and the smooth flow of global trade slows down.

Countries like the US are using tariffs not just to protect local businesses, but as part of a broader push for economic nationalism. It is about reducing exposure to overseas disruptions, geopolitical shocks, and supply shortages. The goal is simple: make more things locally and regain control over critical supply chains.

Australia is part of this global conversation. Recent years have shown how vulnerable we are to delays and shortages when goods are stuck at overseas ports, or when global demand for essential products outpaces supply. It is one reason why local manufacturing is quietly making a comeback.

From R.M. Williams expanding its boot production in Adelaide, to Bega Cheese taking over more of its local milk processing, to smaller firms increasing capacity in food, packaging, and construction materials, the motivation is practical, not political. Shorter, domestic supply chains mean faster delivery, greater control, and less reliance on unstable international markets. It is also about keeping skilled jobs in regional communities and insulating key industries from unpredictable global shifts.

For businesses, it means reshaping operations to become more resilient. For consumers, it means a mix of more local products, potentially higher prices, but with the comfort of knowing essential goods are less likely to be held up by overseas disruptions.

 

Why it matters for Australia

Australia is not one of Trump’s main targets. The bigger issue is that many of our most important trade partners — China, Japan, South Korea, Malaysia, and Vietnam — are facing much higher penalties.

These are the countries that buy huge volumes of our iron ore, coal, gas, and education services. If those economies slow down or shift their focus inward, it will have a serious indirect impact on Australia’s economy. Commodity prices could fall, new investment could be delayed, and Australian exporters could find themselves caught between larger, competing powers.

There is also a financial risk. As the US dollar strengthens off the back of these tariffs, borrowing costs around the world are likely to rise, putting pressure on interest rates and inflation in Australia. That will affect household budgets, mortgage repayments, and the cost of imported goods in everyday life.

 

A new balance between global and local

Beyond the economic headlines, what these new tariffs and trade restrictions reveal is a deeper shift. The globalisation of the past three decades — where goods, services, and capital moved freely across borders — built the modern supply chain system we rely on today. But now, trade tensions, political rivalries, and security concerns are reshaping that system.

The world is moving toward regionalised and nationalised supply chains. And while completely cutting off international trade is neither possible nor sensible, countries like Australia will need to rethink their balance between globalisation and self-reliance.

That means building stronger local industries where it makes sense, ensuring supply security for essential goods, and staying competitive in key export markets while managing the growing risks of international trade.

For Australian consumers, it means adjusting expectations: more local products on shelves in the years ahead, but also potential delays, higher prices, and changing availability as global supply lines are redrawn.

The old model of cheap, frictionless trade is fading. The next chapter will be about resilience, flexibility, and having a mix of global and local options. The sooner we adjust, the better prepared we will be for what comes next.

 

Professor Ben Fahimnia

The University of Sydney Business School