The Labor government inherited significant foreign policy challenges in May 2022: frozen relations with China costing $20 billion annually in trade restrictions, deteriorating Pacific partnerships, and uncertain alliance trajectories. Through patient diplomacy prioritising tone alongside substance, the government restored dialogue with Beijing whilst deepening US security cooperation, demonstrating these objectives need not conflict.

Relations with China stabilised through the first prime ministerial meeting with President Xi since 2016, achieved at the November 2022 G20 summit in Bali. Trade restrictions lifted progressively across barley (August 2023), timber (October 2023), coal (late 2023), and wine (March 2024). Wine exports to China recovered from $14 million in 2023 to $877 million in 2024, contributing to record bilateral trade of $312 billion. Critically, this occurred whilst maintaining AUKUS implementation, South China Sea operations, and expanded US military presence including B-52 bomber facilities at RAAF Base Tindal.

The US alliance advanced through the AUKUS submarine pathway, with Congressional authorisation in December 2023 for three to five Virginia-class submarines from the early 2030s. The May 2023 Climate Compact elevated climate cooperation to a third alliance pillar alongside defence and economics, backed by Australia's $22.7 billion Future Made in Australia programme. Domestic missile manufacturing commenced in December 2025 at Port Wakefield, South Australia, producing Guided Multiple Launch Rocket Systems with capacity for 4,000 rounds annually from 2029.

Managing the Trump administration's return required strategic patience. After ten months without a bilateral meeting, the October 2025 White House visit secured an $8.5 billion critical minerals framework with $1 billion committed by each nation within six months, plus Trump's public commitment that AUKUS would proceed "full steam ahead". When 25% steel and aluminium tariffs were imposed in March 2025 without exemptions, the government chose strategic restraint over retaliation, maintaining the reasonable actor position.

Pacific engagement received record $2 billion annual development assistance, addressing regional priorities through the Pacific Engagement Visa (3,000 annual places), expanded Pacific Australia Labour Mobility scheme, and a $1.4 billion security package. The Falepili Union with Tuvalu recognised statehood despite climate impacts whilst providing migration pathways. The Australian Infrastructure Financing Facility committed $1.25 billion across 14 projects in nine countries.

Defence funding increased by $50.3 billion over the decade, with annual budgets growing from $53 billion to an estimated $100 billion by 2033-34, reaching over 2.3% of GDP. The April 2024 National Defence Strategy and rebuilt Integrated Investment Program allocated $330 billion over the decade, creating approximately 20,000 direct AUKUS-related jobs and hundreds more through capability investments including UH-60M Black Hawks (initial operating capability February 2025) and E-7A Wedgetail upgrades ($569 million contract, March 2025).

Key outcomes:

• Restored China relations worth $20 billion in annual trade whilst maintaining AUKUS and US alliance commitments, achieving record bilateral trade of $312 billion in 2024

• Secured Trump administration endorsement of AUKUS and $8.5 billion critical minerals agreement through patient diplomacy despite ten-month delay in bilateral meeting

• Commenced domestic missile production (December 2025) and advanced B-52 bomber facilities at RAAF Base Tindal, with US Congressional authorisation for Virginia-class submarine transfers

• Delivered record $2 billion annual Pacific development assistance with first permanent migration pathway (3,000 Pacific Engagement Visas annually)

• Increased defence spending by $50.3 billion over the decade, with annual budgets projected to reach $100 billion by 2033-34 (over 2.3% of GDP)