Lowy Institute Poll 2025 Report

Economy and trade

Economic optimism

In 2025, the world faces a highly uncertain economic environment, in large part due to US President Donald Trump’s erratic tariff announcements and reactions from major economies.

At time of fieldwork, President Trump had announced plans for 25% tariffs on steel and aluminium imports to the United States, including from Australia. He had also announced or threatened tariffs against China, Canada, Mexico, and several other countries. He had not yet announced his 2 April ‘Liberation Day’ tranche of tariffs on countries around the world, and tariffs between the United States and China had not yet escalated to their peak.

Combined with ongoing cost-of-living pressures impacting many households domestically, Australians’ sense of economic optimism has now fallen to its lowest point in the Lowy Institute Poll’s two-decade history.

Only half of Australians (52%) say they feel any level of optimism about Australia’s economic performance over the next five years, equalling a Covid-era low in 2020. Almost no one (2%) says they feel ‘very optimistic’ about the economy. By contrast, almost half of the public (47%) say they feel ‘pessimistic’ (40%) or ‘very pessimistic’ (7%) about the economy.

Those in the 18–29 year age group feel least optimistic about the economy (43%), about ten points lower than levels of optimism in every other age bracket. Australians who lean towards the Labor Party (66%) report higher levels of economic optimism than those leaning towards the Coalition (52%) or the Greens (46%).

Manufacturing in Australia

Since the deregulation of the Australian economy in the 1980s, successive governments have largely relied on market forces to determine what Australia produces. In 2024, the Albanese government introduced the ‘Future Made in Australia’ policy — a targeted industrial policy that commits $23 billion in government subsidies and support over the next decade to help build Australian manufacturing capability in clean energy, green metals and fuels, and minerals processing. This policy focuses on supporting industries aligned with Australia’s net zero transition, as well as improving economic resilience and security.

Critics argue that Australia lacks a competitive advantage in producing some of these products, and should instead import the necessary technologies or components from lower-cost producers. Currently, China dominates critical mineral supply chains and the production of most clean energy technologies.

At least in principle, Australians see value in manufacturing more goods domestically. The vast majority of the adult population (83%) say Australia should make more goods in Australia, even if they cost more. Only 16% of Australians say Australia should source all goods from wherever they cost less.

This finding complements the results of a separate question on supply chains asked in 2023, which found that seven in ten Australians (70%) thought the country should prioritise running supply chains through friendly countries, even if it means higher prices.¹