Australia's reelected government says US-China tussle to be top priority

(Reuters) - Protecting Australia from the "dark shadow" of a U.S.-China trade war will be the first priority for Australia's re-elected Labor government, Treasurer Jim Chalmers said on Sunday after a resounding election victory for his centre-left party.

Prime Minister Anthony Albanese's Labor Party appeared likely to expand its majority in parliament to at least 85 seats from 77, the Australian Broadcasting Corp projected, after most polls had suggested it would struggle to keep its slim hold on the 150-seat lower house. More than two-thirds of votes have been tallied, with counting to resume Monday.

Echoing an election in Canada less than a week earlier, Australia's conservative opposition leader, Peter Dutton, lost his seat as voters, who initially focused on cost-of-living pressures, grew increasingly concerned over U.S. President Donald Trump's sweeping tariffs and other policies.

"This was beyond even our most optimistic expectations," Chalmers told the ABC a day after the election.

"The immediate focus is on global economic uncertainty, U.S. and China, and what it means for us," Chalmers said.

"What's happening, particularly between the U.S. and China, does cast a dark shadow over the global economy ... We need to have the ability, and we will have the ability, to manage that uncertainty."

Polls had shown Labor trailing the opposition conservative coalition for nine months until March, amid widespread angst about the government's handling of inflation.

But the polls flipped when the conservatives unveiled a proposal to slash the federal workforce, which was compared to the Trump administration's moves to cut back government agencies. A proposal to force federal workers back to the office five days a week was also criticised as unfair to women.

Trump's April 2 tariff announcement added to voters' unease as it sent shockwaves through global markets and raised concerns about the impact on their pension funds.

"It was clear that our party has an issue in urban Australia, which is where most people live," said former conservative member of parliament Keith Wolahan, who conceded his seat at the election.

"We need to really dig deep and think about who we are and who we fight for and who makes up Australia," Wolahan said in an interview with the ABC.

(Reporting by Byron Kaye; Editing by Edmund Klamann)