Australia Election 2025: Policies, tariffs discussions, and market impact

With the federal election set for May 3rd, 2025, Australia’s political scene is coming into sharper focus, and so are its potential effects on the markets. Key instruments like AUD currency pairs and the ASX 200 index could respond to shifts in investor sentiment depending on how the vote plays out.

The election presents a contest between the Labor party, led by Prime Minister Anthony Albanese, and the opposition Coalition, headed by Peter Dutton.

The Labor Party won the elections in 2022 and ended 9 years of conservative rule.

Advocates for increased public spending, including an additional $8.5bn for Medicare to enhance bulk-billing services. The party also emphasises renewable energy, aiming for 82% of Australia’s energy to come from solar and wind by 2030, supported by a $2.3bn fund to reduce battery storage costs.

Further details on the Labor Party’s proposals can be found https://alp.org.au/policies.

They propose tax rebates, a 25% reduction in permanent migration to alleviate housing pressures, and investments in gas infrastructure and nuclear energy. The Coalition also plans to halve the fuel excise, offering a 25-cent per-litre savings.

Further details on The Coalition’s proposals can be found https://www.liberal.org.au/.

On 3 April 2025, Prime Minister Albanese issued a statement that strongly opposed the tariffs introduced by Donald Trump, describing them as “unjustified” and stressing the need for Australia to preserve solid trade ties with global partners. In response to the 10% tariff on Australian imports, Albanese laid out a five-point strategy that includes offering $1bn in interest-free loans to help businesses explore and expand into new export markets.

Meanwhile, local media, such as The Guardian and Sky News, have reported that Opposition Leader Peter Dutton has been under pressure over what some see as his closeness to Trump-era policies. Critics suggest his stance may risk damaging Australia’s diplomatic and economic relationships. For his part, Dutton has taken steps to distance himself from Trump’s measures, arguing that Australia must defend its own interests while engaging constructively with its allies.

AUD/USD: Based on movements during the 2022 election period, it was noted that the AUD/USD exchange rate moved noticeably as traders adjusted their positions based on uncertainty and changing expectations around economic policy and leadership.

ASX 200 Index: It is also generally expected that the Australian stock market would be more unpredictable during an election campaign. Historically, the ASX 200 tends to drift sideways in the weeks before the election, reflecting the broader uncertainty. Once the results are in and the policy direction is clearer, the market often rebounds with a modest relief rally.

Traders would be wise to keep a close eye on the policy updates and election news, as these factors can play a key role in shaping market moves and guiding smart trading choices.