SYDNEY - A trade war sparked by U.S. President Donald Trump's tariffs may drive up global inflation, stoke market volatility and slow economic growth, the CEOs of two top Australian banks said on Tuesday, but added Australia was insulated from the disruption.

The heads of No. 1 retail lender Commonwealth Bank of Australia and No. 1 business lender National Australia Bank old a conference the new US administration's protectionist policies would likely strain the global economy in the medium term with higher costs and lack of certainty.

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But Australia's roughly $15 billion a year in exports to the US was small compared to its overall export trade, so the country was better placed than Canada, which sells 85 percent of its exports to the US, the financial leaders added.

"There's certainly risk to the downside, around slowing global growth," CBA CEO Matt Comyn told the Australian Financial Review Business Summit in Sydney, adding US tariffs would mean "inefficiencies in trade (and) therefore more inflation".

CBA had reported a "pronounced uptick" in mortgage applications since the Reserve Bank of Australia cut interest rates last month for the first time since November 2020 to 4.1 percent, Comyn's head of retail banking Angus Sullivan told the conference earlier.

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NAB CEO Andrew Irvine said the rate cut had been an "exhale of breath" in the economy, but "tariff madness" under Trump may lower the chance of further cuts this year. Currently NAB expects two 25-basis point cuts in 2025.

"We're not an island," Irvine told the conference. "If this tariff madness does happen, we could be at the end of (rate) reductions."