G7 Summit set to test Albanese-Trump ties as military and trade disputes loom following Washington's demands of Canberra
Mr Albanese and President Trump will likely meet for the first time in Kananaskis, Canada between June 15 and 17—either a formal meeting or a discussion on the summit sidelines.
President Trump's attendance at the G7 summit itself remains unconfirmed, but preparations are underway on the assumption that the meeting will occur.
It comes after the request from US Defence Secretary Pete Hegseth for Australia to lift defence spending to 3.5 per cent of GDP, up from the 2.33 per cent projected by 2033.
Trade Minister Don Farrell told Sky News Sunday Agenda that the government had "walked the talk" on existing defence investments.
"We are committed to the defence of this country. We are committed to a significant uplift in the amount of spending," he said.
Mr Albanese has not ruled out further defence investment, but maintains any additional spending must be aligned with specific needs—not what he calls 'arbitrary targets'.
However, Defence Chief Admiral David Johnston told a defence summit on Wednesday that his department would likely ask for a funding boost in the next biennial review.
'The opportunity we have with the biennial cycle now is to keep coming back and reviewing the strategy,' he said.
'Looking at the opportunities or where the investments are required, putting the case to government to increase the defence expenditure where we believe it is needed.'
Admiral Johnston also expressed concern about the possibility of Australia waging war in the future on home soil, rather than overseas.
However, inside the government there has been a belief that they do not expect a direct military invasion of Australia by China.
Rather, insiders view strategic assets like submarines and long-range missiles as tools to protect critical trade routes, not to repel a land invasion.
The clash over defence spending follows a week of escalating tension between the government and the Australian Strategic Policy Institute, which hosted Admiral Johnston.
Mr Albanese publicly dismissed the think tank's recent report warning of a 'hollow' Australian Defence Force, calling ASPI's criticisms 'predictable'.
ASPI Executive Director Justin Bassi defended the institute's work, saying the public deserves transparency on the country's strategic vulnerabilities.
'Unfortunately, the world has these threats that do impact Australia and to counter these threats we need to, unfortunately, spend more money in the area,' he told Sky News.
Adding another layer of complexity to the Albanese-Trump meeting will be growing trade tensions.
The White House has moved to double steel tariffs from 25 to 50 per cent, imposed a blanket 10 per cent tariff on all foreign goods, and signalled further barriers on Chinese imports.
Sources have said that a proposal to exempt Australia from some of those tariffs in exchange for expanded access to Australian critical minerals was rejected.
The suspicion was that the deal was scuttled by President Trump's trade advisor Peter Navarro.
Australia has begun considering relaxing biosecurity restrictions to allow US beef imports, a sensitive negotiation being handled by Trade Minister Don Farrell.
Despite these flashpoints, senior government figures believe trade, not defence, will dominate the Prime Minister's first engagement with Mr Trump.
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