Australian Prime Minister openly mocks Trump...

Yeah.  Listen to it all.

If Trump was smart he would retaliate.  He would teach that Prime Minister a lesson and use him as a demonstration to the rest of the world.

Cancel all joint military exercises.

Pull US troops from Australia.

Cancel all intel and tech sharing.

Slow walk/delay/put up roadblocks to any trade agreements.

In short if Trump had balls he'd make this guy hurt and force him to get on his knees and apologize.  It won't happen...but it should.