A group of public service chiefs gathered on Thursday night for a quiet dinner in Canberra to send off Australia’s new ambassador to the US.

There was lightning and heavy rain outside the upmarket Pan-Asian restaurant Chairman and Yip, but inside the private dining room the mood was cheerful.

Due to replace Kevin Rudd on 1 April, the outgoing defence boss Greg Moriarty is headed to a Washington that would be unrecognisable to most of his predecessors.

If it wasn’t already clear that the US under Donald Trump is an ally of Australia in name only, this week should have ended any doubt. Little more than a year into his second term, Trump has devolved from a chaotic force in the White House to a strategic risk for Australia – and Australian households and businesses look set to be big losers.

Now three weeks into the US-Israeli war of choice in Iran, the Albanese government is rapidly updating its budget forecasts and warning of economic pain and higher petrol prices out to 2029.

Inflation as high as 5% this year is likely and Treasury modelling suggests a longer lasting war could result in a 0.6% hit to GDP in 2027, a cost of about $16.5bn to the economy. On Thursday, the treasurer, Jim Chalmers, pushed out the timeline for reviving sluggish productivity from two to five years.

One upside could be increased revenue from commodities, like Australia experienced from Vladimir Putin’s invasion of Ukraine. The soaring gas price has already led to signals from Labor about openness to........

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