The Victorian Government has secured the passage of the Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026, introducing a suite of reforms aimed at improving consumer protection and confidence in the apartment market.

Resilience Insurance, Australia’s leading Latent Defects Insurance (LDI) provider, has welcomed the move.

The LDI elements of the Bill passed with bipartisan support and now moves to the Legislative Council where debate and passage are expected later this month. It represents a significant milestone in the national shift toward stronger, longer-term protection for apartment buyers.&nbsp;

The reform would deliver practical benefits across the housing system. Apartment owners will have stronger protection if major defects emerge, developers and builders will have a clearer quality framework to work within, and the State will reduce the risk of serious building failures becoming a long-term financial and social burden for households, communities and government.&nbsp;

LDI helps support apartment delivery while providing stronger protection for buyers and encouraging better construction outcomes.&nbsp;

Resilience LDI provides apartment owners with 10 years of insurance-backed cover for major structural defects from completion, with direct claim access to the insurer. This means owners are not required to first pursue developers or builders through costly legal action before accessing protection.&nbsp;

Resilience Insurance has been operating in Australia since 2022 and has already insured hundreds of development projects covering many thousands of apartments across Australia.&nbsp;

At approximately 1.8 per cent of build cost, it is a cost-competitive alternative to the traditional two per cent Strata Bond, bond while delivering significantly broader and longer protection.&nbsp;

“The Victorian Lower House vote shows that reforms like this succeed when they are practical, evidence-based and supported by industry," says Corey Nugent, CEO of Resilience Insurance.

"Victoria is moving quickly on a reform that will make a real difference for apartment buyers, while supporting better building outcomes and greater confidence in apartment delivery.

“This is step one. We look forward to the Bill completing its passage through the Legislative Council and to working with government and industry to implement the framework effectively.”&nbsp;

Fast Facts: What is Resilience LDI?&nbsp;

<ul>
	<li>Resilience Latent Defects Insurance (LDI): Covers major structural defects for 10 years from completion.&nbsp;</li>
	<li>Consumer-first: Direct claim access, no need for lengthy legal action.&nbsp;</li>
	<li>Cost advantage: At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.&nbsp;</li>
	<li>Market leader: Resilience Insurance is the first approved LDI provider in NSW.</li>
</ul>

The Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 has passed the Victorian Lower House, putting Victoria on track to become the first state to legislate an industry workable LDI framework as a formal alternative to the Strata Building bond. 

Joel Robinson

10-year Latent Defects Insurance for new apartment buyers set to land in Victoria

Just a few months after acquiring a prime Broadbeach site on the corner of First Avenue and Surf Parade, family-run developer <a href="https://www.apartments.com.au/developers/raptis">Raptis</a> has filed fresh plans for a new apartment development.

Raptis is seeking to deliver a <a href="https://www.apartments.com.au/new-apartments/17-19-first-avenue-broadbeach-qld-4217">29-storey tower with 73 apartments</a> on the 818 sqm site. It will be the developer's seventh project in the suburb, as they are approaching completion of The Sterling on George Avenue.

There will be a pool, barbecue and outdoor dining area, residents lounge and dining, sauna and steam room, gym, and a Yoga and Pilates studio.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="b554da3f-7344-49aa-b1c9-44cf459af0d7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%2010.41.45%E2%80%AFAM.png?VersionId=zzjWu1iO1wnuYv4EV4fyOyf5nSXjGYut" />

Raptis Joint Managing Director, Evan Raptis, says they remain&nbsp;committed to developing quality infill sites across the Gold Coast in the lead-up to the 2032 Brisbane Olympics.

"This project continues our long track record of delivery in Broadbeach, and we look forward to bringing another premium development to this thriving precinct."

The announcement follows strong delivery momentum for Raptis, with The Sterling Broadbeach nearing completion and construction well underway on the final stage of the Waterpoint community adjacent to Harbour Town. The developer's continued investment in the Gold Coast reflects confidence in the region's apartment market fundamentals, underpinned by sustained Southeast Queensland population growth.&nbsp;

The outlook for the region is further bolstered by infrastructure investment tied to the Brisbane 2032 Olympic Games, which is expected to drive continued economic and population growth across the SEQ corridor.&nbsp;

Subject to a favourable response from Gold Coast City Council, construction on the new First Avenue tower is targeted to commence before the end of 2026.&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/it-s-all-in-the-family-four-decades-later-raptis-continues-to-shape-the-gold-coast-skyline">It’s all in the family: Four decades later, Raptis continues to shape the Gold Coast skyline</a>

Read more: <a href="https://www.apartments.com.au/news/qld/raptis-secures-prime-surf-parade-site-for-next-broadbeach-apartment-development">Raptis secures prime Surf Parade site for next Broadbeach apartment development</a> 
&nbsp;

Gold Coast developer brings seventh Broadbeach project to market, targeting construction commencement before year end

First look: Raptis lodges plans for new 29-storey Broadbeach tower 

Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368853]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available.

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

First look: S&S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street

Trade Policies

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EXPERT OBSERVER
China’s economy contracted by the most since 1992 in the March quarter – as expected – as government coronavirus (COVID-19) containment measures shut down large swathes of the world’s second largest economy.
This week the International Monetary Fund (IMF) estimated that China’s annual economic growth rate for 2020 would average 1.2 per cent. Should this eventuate, it would be the slowest growth rate since the final year of the Cultural Revolution in 1976, reflecting the huge economic and social toll wrought by the virus.
That said, it appears that some ‘green shoots’ are emerging on China’s supply side. Bloomberg economists estimate that China’s back-to-work rate had climbed to around 95 per cent by April 10 with some coronavirus-enforced restrictions being eased. Data from Bloomberg also shows that larger industrial enterprises – oil refineries, steel mills and construction companies – have mostly resumed operations. In addition, around 85 per cent of small business reported being back at work last week.
And in promising news for Aussie exporters, China’s Ministry of Housing and Urban-Rural Development has advised that 85 per cent of housing-related and municipal infrastructure projects - that were delayed due to COVID-19 enforced shutdowns - had resumed construction on April 1.
On Thursday, China’s central bank Governor Yi Gang said, “Chinese economic growth is resilient”. And judging by China’s historic-high total new credit data in March, it appears policymakers are willing to provide solid support to the COVID-19 ravaged economy.
The People’s Bank of China have continued to cut lending rates and reduce funding costs, supporting credit expansion. And in another positive sign, China’s residential home prices lifted in March on the back of pent-up demand following February’s lockdown. On the demand side, international trade data was better-than-expected in March, but that will be short-lived with major trading partners now grappling with their “lockdown recessions.”
What do the figures show? The Chinese economy (GDP) contracted by 9.8 per cent in the March quarter (forecast: -12.0 per cent). GDP contracted at a 6.8 per cent annual rate in the year to March (forecast: -6.5 per cent), following a 6 per cent expansion in the year to December. It was the sharpest contraction in economic activity since at least 1992 when official GDP records began.
Retail sales fell at a 15.8 per cent annual rate (forecast: -10 per cent) after declining at a 20.5 per cent annual rate in the year to January/February. Over the year to March, spending fell the most on restaurants &amp; catering (down 46.8 per cent), clothing (down 34.8 per cent), jewellery (down 30.1 per cent), household electronics (down 29.7 per cent), furniture (down 22.7 per cent) and motor vehicles (down 18.1 per cent). But spending lifted on food (up 19.2 per cent), medicine (up 8 per cent), telecommunications (up 6.5 per cent) and office supplies (up 6.1 per cent).
Industrial production fell at a 1.1 per cent annual rate in March (forecast: -6.2 per cent) after declining at a 13.5 per cent rate in January/February. Over the year to March, production fell the most for manufacturing (down 1.8 per cent), followed by power supply and energy (down 1.6 per cent). But mining was up 4.2 per cent. By industry, auto manufacturing fell by 22.4 per cent, but pharmaceuticals (up 10.4 per cent) and telecommunications (up 9.9 per cent) both rose the most.
Fixed-asset investment fell at a 16.1 per cent annual rate in March (forecast: -15 per cent) after declining at a 24.5 per cent rate in January/February. Over the year to March, investment fell by the most for the private sector (down 18.8 per cent) followed by state-owned enterprises (down 12.8 per cent). By industry, investment by textiles (down 37.1 per cent), general equipment (down 32.1 per cent), and railways and ships (down 31.6 per cent) fell the most. But investment in utilities rose by 2 per cent.
Chinese property investment fell at a 7.7 per cent annual rate over the year to March following a 16.3 per cent contraction over the year to January/February.
The unemployment rate (nationwide survey-based jobless rate) fell from record high of 6.2 per cent in January/February to 5.9 per cent in March.
What are the implications for interest rates and investors?
While China’s economy is expected to bounce-back in the June quarter – supported by a lift in infrastructure spending, lower interest rates and reduced bank borrowing costs – the recovery in 2020 is expected to be modest. In fact, CommBank Group economists are predicting annual growth of just 3 per cent this year as labour market strains hold back consumer spending.
The long road back to recovery is no more evident than in China’s jobs market. A recent study by China’s Peking University shows that the number of new positions on offer shrunk by 27 per cent in the March quarter, led by recruitment cuts among exporters and foreign enterprises. And round 2.3 million people received unemployment insurance in January and February, according to the Ministry of Human Resources and Social Security. A Reuters poll of economists estimates that nearly 30 million jobs may be lost in China in 2020, crimping consumer spending.
And on the demand side, external headwinds are intensifying as China’s major trading partners endure deep recessions. Government containment efforts in the US, UK, Europe and Australia to contain the pandemic - including business shutdowns, travel bans and social distancing measures – will continue to adversely impact trade, supply chains and demand for Chinese goods.
The IMF expects the Chinese economy to rebound by 9.2 per cent in 2021. If this forecast is realised or exceeded, Australia’s own road to recovery will be enhanced. But our economic dependence on China is likely to be questioned after we emerge from the crisis.
Preliminary Australian March international trade data is scheduled for Thursday March 23.
RYAN FELSMAN is a Senior Economist at CommSec
</body></html>

j.ballantyne1990-6AQqhLzZaK

Coronavirus causes China's GDP to fall for the first time ever

<html><body>
The Reserve Bank of Australia (RBA) is set to return to a holding pattern, leaving the cash rate at 1.00%, according to the latest survey data from Finder.com.au.
In the latest Finder RBA Cash Rate Survey™ 44 of the 46 experts and economists (96%) predict the board will hold at the August meeting to let the June and July cuts trickle through the economy.
Almost all experts (92%, 38) expect the next cash rate move will be a cut. Nearly half (49%, 21) are predicting a final low of 0.50%, while a third (35%, 15) tip believe it will bottom out at 0.75%.
But the holding pattern may not last long; the most popular months cited for another cash rate cut are November (35%, 17) followed by October (23%, 11).
Graham Cooke, insights manager at Finder, said with the effects of recent cuts still unrealised, the board is hesitant to cut in three consecutive months.
“The jury’s out on the impact of these most recent cuts – it’s simply too soon to tell.
“Economists feel slightly more confident that recent cuts will have a positive effect on the economy once given time to roll out. While positivity is generally still low, housing affordability remains the most positive economic element.” 
<img src="https://www.urban.com.au/images/2019/8/5/Finder%20-%20August%206%20-%201.JPG" alt="">
“The falling cash rate combined with falling house prices creates a catch-22 for Aussies looking to break into the property market. Buyers will be wanting to take advantage of historically low rates, but also wanting to purchase at the bottom of the market.”
Despite US rate cut, economists are focused on China When asked to indicate their two main economic concerns for Australia right now, decisions by the Federal Reserve in the US ranked towards the bottom of the list, being cited by just three economists (5%).
(Note: some responses were submitted just before the first US cash rate cut since 2008, which saw its lending rate fall to 2.25%.)
Instead, (27%, cited by 17 respondents) experts tipped international relations like the fate of US-China Trade Deal and Australian-Chinese trade in general (14%, 9) as massive concerns for the economy, above issues like unemployment, inflation and housing prices.
“What’s happening between China, Australia and the US right now could have far more potential impact on Australia than the Fed Reserve,” Cooke said.
“If the US and China can finally agree on a trade deal, this may result in US imports replacing Australian ones in some Chinese sectors.
“With Australian beef and dairy being particularly strong trade commodities in this space right now, such a deal could be bad for Aussie farmers, and ultimately our economy.”
Peter Boehm of KVB Kunlun said domestic concerns are just part of the equation.
“The impact of international trade negotiations will also play an important role in determining the need or otherwise for another rate adjustment.”
<img src="https://www.urban.com.au/images/2019/8/5/Finder%20-%20August%206%20-%202.JPG" alt="">
Results from Finder’s Economic Sentiment Tracker™, which gauges five key indicators – housing affordability, employment, wage growth, cost of living and household debt – show nearly all tipped more positive this month following the second rate cut.
Introduced in March 2018, this month’s tracker set an all-time low for economic sentiment in cost of living (3%).
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Cash rate will hold meanwhile concerns over China-US relations grow

<html><body>
EXPERT OBSERVER
Since Donald Trump was elected President back on November 8, 2016 we have focused on whether we will see Trump the rabble-rousing populist or Trump the business-friendly pragmatist.
Despite lots of noise – particularly via Trump’s frequent tweets – for the most part Trump the pragmatist has dominated so far.
But we have clearly seen a swing to Trump the populist this year – raising risks for investors.
So far Trump has been good for markets In the period since his election US shares are up 34%, global shares are up 28% and Australian shares are up 21%.
While the strength in share markets would have occurred anyway given stronger global growth, US tax reform, fiscal stimulus and deregulation have clearly helped and contributed to the US share market’s outperformance.
While US tax reform and tax cuts have received much focus, the Trump administration’s focus on deregulation is equally as significant with the US under Trump seeing the least amount of new economically significant regulation since the Reagan Administration in the early 1980s. 
In terms of tax reform and deregulation the Trump Administration has much in common with Reaganomics.
Populism starting to dominate pragmatism
This year though the balance has shifted towards a greater emphasis on populist policies – notably protectionism and criticism of China, the return to sanctions on Iran and arguably recent criticism of the Fed for raising interest rates and pushing up the US dollar.
There are several reasons for this shift in emphasis: the pro-business element of Trump’s policies were mainly completed last year; it’s a mid-term election year so Trump is back in campaign mode; Trump’s approval rating has improved despite this year’s controversial policies suggesting firm support for them from his Republican party base; and the strength of the US economy has also emboldened him.
In fact, it could be argued that last year was all about bolstering the US economy ahead of this year’s more controversial policies.
The main risks around President Trump centre around five key issues: the rising risk of a full-blown trade war; the expanding budget deficit; the risk of interference in the Fed; the return of sanctions on Iranian oil exports threatening wider Middle East conflict; and the risk Trump ultimately comes into trouble with the Mueller inquiry.
We will now look at each of these in turn.
Rising trade war risks
This issue has been done to death but won’t go away.
So far the tariff increases actually implemented amount to just 3% of total US imports.
While this has been met with proportional retaliation by other countries it’s a long way from a full-blown global trade war.
However, the issue is what happens next.
Another $US16bn of Chinese imports will likely be hit with a 25% tariff soon and the US is readying a 10% tariff on another $US200bn.
Trump is also threatening to raise tariffs on all $US550bn of Chinese imports.
China is threatening to retaliate proportionally although it will have to be with other means as it only imports $US130bn from the US.
Trump is also threatening to put tariffs on auto imports and looking at Uranium.
News of a deal between the US and the EU to work towards zero tariffs on industrial goods is good news in terms of heading of a full-blown trade war between the two, but negotiations have a long way to go.
There was hope of a deal with China in May – with Trump initially crowing about a May 20 trade deal, but since then both China and the US have dug in with Trump tapping popular support for protectionism and anti-Chinese sentiment.
So, the trade threat could get still worse before it gets better which means it risks taking the edge off economic growth.
Modelling by Citigroup of a 10% tariff hike by the US, China and Europe showed a 2% hit to global GDP after a year.
Of course, we are not seeing a tariff hike on all goods but the impact could still be significant if negotiations with the EU and China fail and all the tariffs being talked about are implemented.
There are a few offsetting factors.
First, China is moving to provide stimulus to support growth.
Second, much of Trump’s approach still looks designed to apply “maximum pressure” to reach a negotiated outcome – and so far so good in relation to Europe.
And Trump knows that the costs to US workers (from soybean farmers to Harley Davidson workers) and consumers will escalate as more tariffs are imposed.
So, our base case remains that some form of negotiated solution will be reached, but in relation to China this may not occur until next year.
Interference in the Fed and US dollar Trump’s recent comments criticising Europe, China and others for helping drive the US dollar up and the Fed for raising interest rates naturally raises concerns that he will intervene in foreign exchange markets and interfere with the Fed.
The comments lack economic logic – if “making America great again” means stronger US economic growth then it also means higher US interest rates and a higher US dollar – and maybe the Fed came in for a serve after Fed Chair Powell observed that “countries that have gone in a more protectionist direction have done worse”!
Trump’s annoyance may have been triggered by the slide in the value of the Chinese Renminbi.
While this looks to be mainly a strong $US story (as the $US is up around 7% against its low earlier this year against a range of currencies compared to an 8% gain against the Renminbi) the Chinese authorities seem quite content to let it fall for now and this will obviously offset Trump’s tariffs on Chinese goods.
Despite all this it’s unlikely in the short term that Trump will act on his opinions on rates and the $US.
US Treasury Secretary Mnuchin said the administration would “not interfere with the decisions of the Fed or move to manipulate the value of the dollar.” Trump is well known to be a high debt/low interest rate guy so it’s no surprise he is not happy with rising rates.
But the Fed answers to Congress, has a mandate to keep inflation down and will do what it sees best – which with strong growth and at target inflation means returning interest rates to more normal levels.
However, longer term there is a risk that Trump will weaken the institution of an independent central bank targeting low inflation and may also seek to return to a more interventionist approach regarding the US dollar, particularly if America’s trade deficit refuses to fall.
Based on past experience such political intervention would risk much higher inflation which would be a big negative for investment assets as the revaluation that occurred as we moved from high inflation to low inflation would reverse.
Fortunately, we are not there yet.
 The expanding US budget deficit
It’s been the norm for the US budget deficit to blow out when unemployment rises (as tax revenue falls and jobless claims go up) and decline when unemployment falls.
Thanks to Trump’s fiscal stimulus it’s now blowing out when unemployment is collapsing and looks to be on its way to 5% of GDP.
This raises three risks. First, it may mean higher than otherwise interest rates and bond yields as the Fed may have to raise rates more than would otherwise be the case to stop the economy overheating and the Government’s competition for funds results in higher bond yields. 
So far there is not a lot of evidence of this with US bond yields remaining relatively low – presumably held down by low global bond yields and trade war fears – but its still a risk as US inflationary pressures rise.
Second and more fundamentally it begs the question of debt sustainability when the next recession arrives given US public debt is already around 100% of US GDP.
Finally, US fiscal stimulus by adding to the US savings-investment imbalance is adding to the US trade deficit and so is completely inconsistent with his trade policies.
Even if there was a completely level playing field on world trade America will still have a trade deficit!
The return to sanctions on, and tensions with, Iran Perhaps a big surprise this year for some has been that President Trump looks to have swapped a half decent deal with Iran for a dodgy one with North Korea.
While the latter holds out the hope of (maybe) reducing the threat of a nuclear attack on the US, the return to sanctions and tensions with Iran risks higher oil prices. S
ince the lows of 2015 oil prices have increased by 70% reflecting increased demand and OPEC’s 2016 cutback.
Global stockpiles and spare capacity have been rundown and supply from Libya and Venezuela is uncertain.
Our base case is that demand growth will be more constrained from here and that a ramp up in US shale oil production will help contain oil prices around $US70-75 a barrel.
The risk though is that the loss of around 800,000 barrels a day of Iranian oil exports and the renewed risk of wider conflict in the Middle East associated with Iran (eg, if Iran closes the Strait of Hormuz through which 20% of global oil supply moves in retaliation against US sanctions) results in higher prices.
The Mueller inquiry into Russian links
Our view in relation to the Mueller inquiry remains that unless Trump has done something very wrong the Republican controlled House will not move to impeach him and even if a Democrat controlled House post the mid-terms did, the Senate will not have the necessary two thirds of votes to remove him from office.
However, his sensitivity over the issue, along with his comments seemingly favouring Russian President Putin’s word over US security agencies does remind a bit of Nixon in relation to Watergate.
So his removal cannot be ruled out.
But this would just mean VP Mike Pence would take over with basically the same economic policies (but with less tweet noise) and economic conditions are stronger than in 1974.
Trump tweet noise
The risks around Trump are real and need to be watched carefully.
But Trump generates a lot of noise and much of it is contradictory and confusing – in the last week Trump tweeted “Tariffs are the greatest” only to tweet 12 hours later that “I have an idea for them. Both the US and EU drop all tariffs” – and often reflects bluster ahead of negotiations – recall his “fire, fury and frankly power” threat to North Korea.
So the best approach for investors in relation to Trump is to turn down the noise.
Dr Shane Oliver is the Head of Investment Strategy and Chief Economist for AMP Capital
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