Relations between Australia and Europe hit a historic low in 2021 when Australia scrapped a €50 billion submarine deal with France in favour of a new security alliance with the UK and the US, known as AUKUS. Two years later, tensions resurfaced when a near-finalised EU-Australia free trade deal collapsed – particularly over limited EU market access for Australian agricultural exports – underscoring a deepening rift between both sides.
Fast-forward to 2025: US President Donald Trump raised eyebrows in Canberra as he appeared unaware of the AUKUS alliance at a press conference in February. Two months later, his administration imposed tariffs of at least 10% on all Australian imports.
This is “not the act of a friend,” said Prime Minister and Labor leader Albanese, while Trade Minister Don Farrell, who had walked away from the EU deal in 2023, said “the world has changed” – a sentiment that also reflects the shifting dynamics around the AUKUS fallout.
The UK, Australia’s other AUKUS partner, is now edging closer to Europe on defence and trade, while Albanese’s Labor government, elected in 2022, has moved to repair ties with France. It is paying €555 million in compensation to Naval Group – the French state-owned contractor that was to build Australia’s cancelled fleet of submarines – has signed a bilateral roadmap, and has received a pledge from President Emmanuel Macron to rebuild ties.
Labor leading the polls
On Saturday, voters will have to choose between Albanese, a career politician with working-class roots and a pragmatic style, and Peter Dutton, a former police officer and veteran minister leading the opposition Liberal–National Coalition, known for his hardline views on immigration and national security.
In the final stretch of the campaign, most polls put Labor ahead of Dutton’s party as campaigns focused on domestic issues like cost of living and immigration, though Trump’s return has stirred voter anxiety over global stability.
A Labor-led government appears favourable for the EU, even if Albanese’s party will eventually need support from independent lawmakers to form it.
AUKUS in focus
Neither party is questioning the alliance with the US, expected to hold through Trump’s second term. AUKUS, backed across the aisle, also remains untouched and is viewed as key to boosting defence against rising Indo-Pacific threats, especially from China.
“Whichever party wins on Saturday is going to come under very real pressure from the Trump administration to lift to 3% or more – not in 10 years’ time, but within the next one or two years, in anticipation of a possible threat of a war occurring over Taiwan, for example,” said Malcolm Davis, a senior defence analyst at the Australian Strategic Policy Institute (ASPI).
Labor has raised spending to 2% of GDP during the past term and has plans to reach 2.3% by the mid-2030s. The Liberal-National Coalition, meanwhile, has promised A$21 billion more over five years, aiming for 2.5% of GDP within five years and 3% within a decade.
As for the EU, Davis is optimistic about its potential role in defence after the election.
“I think Europe is not irrelevant, far from it. Europe is becoming ever more significant and important from an Australian perspective. Australia is one of the IP4 members of NATO [the alliance’s four Indo-Pacific partners, Australia, Japan, South Korea and New Zealand]. We’ll probably be sending our defence minister to the NATO meeting shortly after the election,” said Davis.
Davis also pointed to European companies that have a base in Australia – these include Thales, Rheinmetall, Saab, BAE Systems.
“We are strengthening our relations with Europe. But we recognise that Europe probably is going to have its hands full with Russia,” he added.
A Labor win is a win for EU trade
Albanese used Trump’s tariffs, which made headline news throughout the campaign, to cast his party as a force for stability and unveiled a five-point plan in response.
Dutton, however, signalled a willingness to confront Trump to protect national interests without fully endorsing or outright rejecting the White House’s policies – reflecting tensions within his party between appealing to Trump’s base and the broader electorate.
On 2 April – Trump’s so-called ‘Liberation Day’ – Farrell held his first call with EU Commissioner Maroš Šefčovič in a bid to revive stalled trade talks.
Šefčovič called the exchange “very warm and constructive” and said both sides agreed to meet shortly after the election to “fast-track” the resumption of free trade talks.
“I think an agreement could be reached very quickly. The negotiations have been going on for eight years. Most issues have been resolved,” explains Richard Pomfret, economics professor at the University of Adelaide and author of a recent report on EU-Australia trade talks.
For Pomfret, all it takes is a “little bit of political push to make the trade-offs between the things that have been red-lined so far for the Europeans and Australia.”
“If Labor wins, it will be better for relations with Europe because Labor will push to complete the free trade agreement. If the Liberals win, they will be much keener on emphasising the relationship with the United States and so they’d be less likely to push for completion of the agreement,” he added.
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