Australia should leverage its military assets to combat tariffs, according to Jacqui Lambie.

As the economy reacts to the Trump administration's 10 per cent tariffs on Australia, despite the trade surplus, which has seen markets crash and the Australian Dollar fall to its lowest ebb since the COVID-19 pandemic, the Tasmanian Senator rubbished suggestions the military alliance between the two countries should not be used as leverage.

Speaking on ABC Afternoon Briefing on Tuesday afternoon, Senator Lambie said Pine Gap, a highly secretive joint US-Australian intelligence and surveillance facility in Central Australia, should be used as a bargaining chip "tomorrow", along with the rotation of Marines in the Top End.

"There are things that you can go and do which do not involve tariffs that you can go at the US and really hold them accountable for a few things and say 'nah, come back to the table otherwise we're going to switch this stuff off'," the Palawa woman said.

Earlier this year, Pine Gap saw protests as part of a "global day of action" demanded the facility close. Protestors were seen waving Palestine flags, whilst an Arrernte traditional owner called for land to be returned and compensation paid to them, according to a post on the Mparntwe for Falastin Instagram account.

The Tasmanian Senator, who has criticised both major parties in recent weeks, said Peter Dutton had "nothing new on the table" when it came to Tariffs—despite the Coalition leader insinuating he would have been able to get a better deal from the Trump administration—whilst Prime Minister Anthony Albanese was "sitting on the fence."

Last week, Mr Dutton said, "Resolving this matter will centre around the defence relationship," but clarified later that Australia shouldn't pull back on its commitments.

In response, the PM said the Coalition "simply aren't up to it".

"They are reckless and there is a huge risk from Peter Dutton," he argued.

This week, former prime minister John Howard—who joined the United States in invading Iraq in 2003—told ABC's Insiders on Background podcast defence should never be used as a bargaining chip, and both defence and national security "should always be kept separate" from trade.

However, Senator Lambie disagreed with the former PM, arguing it was "absolute bloody rubbish".

"Start getting tough here," she said.

"You're dealing with Donald Trump…in the meantime, we've got two weak leaders that go 'I just don't know what to do about this' … Put your big-boy pants on and toughen up!"

Speaking on the program, the outspoken Senator, who was highly critical of the lack of means testing in tax cuts announced by the government in last month's budget, also said it was likely the country would go through a recession.

"I live in one of the top ten poorest electorates and I can see what's been going on in the last 18 months, and in the last three months, I've never seen so many shops close – and this is before the Trump stuff," she said.

"So, we have some issues out there with the economy, and this is without tariffs hitting us. We were already in trouble, alright?"

Asked about comments from Mr Dutton on Tuesday that there would be a different financial outcome if the Coalition were in government as opposed to Labor, Senator Lambie said things were already "too far gone" for that to be a reality.

"You can't go this far down and be this close to recession and say, 'I'll be able to fix it overnight,'" she said.

"It doesn't work like that. Unfortunately, we will probably have to go through a recession, and that is the truth of the matter."

The former member of the ADF was also fuming when presented with comments from the now-ex-Liberal candidate for the seat of Whitlam, Benjamin Britton, who said women should not serve in combat positions with the ADF. It mirrored comments from the current shadow defence minister, Andrew Hastie in 2018.

Senator Lambie said Mr Britton's remarks were "very offensive" and "disgraceful", arguing: "My body is broken for that [serving]."

"I would never, ever not do my time in the military again and become one of those combat females. It's one of the proudest moments of my life to say I've been one of those combat females," she said.

"It's absolutely disgraceful. If he was in a combat unit with me, he would have been fixed up in a split second and that would have stopped and he knows it and so do I."