If elected, here's the first promise Dutton should deliberately break

Australia not getting an exemption is bad for Australian exporters who, when tariffs are un-paused, might find themselves exporting a bit less to America and a bit more to other countries at a lower price.

And it's obviously bad for the US-Australia alliance where the "100 years of mateship" Australia markets to America didn't seem to count for as much as we thought.

So why is it a good thing that Australia didn't get an exemption?

It's a good thing because, if Australia did get an exemption, it would raise a very worrying question: what would Trump want in return?

This is also why Mr Dutton, should he win the next election, should abandon his promise to visit Washington DC.

Mr Dutton has promised to make Washington DC one of his first stops if he becomes PM, and has argued that he would be able to make a deal with Trump to get any tariffs removed from Australia.

This would be a mistake.

Suppose, when or if the pause ends, Trump reinstates tariffs on Australia.

President Donald Trump will not remove these tariffs for free. And the list of things he could demand from Australia range from bad to very bad to catastrophic.

The bad things he could demand including removing GST from US imports and removing Australian regulations that apply to those imports.

Removing GST from US imports would mean Australian taxpayers would be effectively subsidizing US products over Australian products since the GST would apply to locally produced goods and services but not those from the US.

This an unreasonable thing to expect from Australian businesses and taxpayers.

Removing regulations from US imports could mean anything from removing our plain-packaging rules from cigarettes to reversing our online safety regulations. It would also reduce our sovereign ability to set our own regulations in Australia, at least to the extent they applied to US firms.

Then there's the very bad things he could demand from Australia.

He could demand that we ignore our biosecurity rules and import North American beef, potentially infected with mad cow disease.

He could similarly target our pharmaceutical benefits scheme. Big US pharmaceutical firms have lamented the Australian government using its buying power through the Pharmaceutical Benefits Scheme to get better prices.

Trump could try to force Australia to stop doing this, meaning either higher prices for Australians buying medicines or higher taxes for Australians through an increased burden on the pharmaceutical benefits scheme.

None of this is even remotely in Australia's interests.

And then there's the catastrophic things Trump could demand.

On the import side, Trump could demand that Australia limit our imports from China, which would mean a sharp increase in the cost of living for Australians.

On the export side, he could demand that we limit our iron ore, coal and other resources exports to China. By any measure, this would cause a painful and prolonged recession in Australia.

It would also be extremely confrontational with China given they are just as dependent on Australia as a seller as we are on them as a buyer for a range of different commodities.

Doing a deal with Trump risks opening up a negotiation where all of these things would potentially be on the table.

Suddenly a 10 per cent tariff is looking like the lesser of two evils.

And to be clear: none of the above are rational demands. But we are not dealing with rational people.

It is now clear from both their remarks as well as their carefully written papers and opinion editorials that those in the Trump administration do not understand the economics of trade.

It is not just rhetoric or strategy, and it's not some 4D chess as people claim.

The administration does not understand what it means for America to have a trade deficit, what it includes, what it doesn't include and what is causing it.

The US trade deficit is caused by the high US dollar which, in turn, is caused by capital inflows that are financing US government, corporate and household debt.

Changing this would not only remove the US as the world's global economic power but would also force interest rates to skyrocket, forcing massive cuts in government, corporate and household spending and big increases in taxes.

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Tariffs will not have any effect in reducing the US trade deficit, and nor would any of the bad, very bad or catastrophic things Trump could demand from Australia.

Nor are trade statistics particularly accurate. They exclude non-tangibles like intellectual property and often attribute an export to the final country in a long-supply chain.

If we corrected for these two effects alone, the US trade deficit and the Chinese trade surplus would both shrink.

The question for whoever is prime minister after the next election is simple: do you want to be having any of the above conversations with President Trump?

If the answer is no, which it should be, then maybe stay home.