AUKUS Anxiety

Australia, like many U.S. allies, is struggling to deal with President Donald Trump. At issue is the country’s national security. Although China is by far Australia’s most important trade partner, it is also the country that Australia’s national security establishment perceives as its greatest threat. Australia’s fear of China is more than a century old and runs deep through every defense strategy that Australia has developed since the signing of the Australia, New Zealand, United States Security Treaty (ANZUS) in 1951 and the resolution of its postwar relationship with Japan later that decade. The same fear drives Australia to keep the United States close today, even as tensions rise over the Trump administration’s economic and defense policies.

The glue now holding Australia and the United States together is AUKUS, a security arrangement that also includes the United Kingdom, formed in 2021. Parts of the agreement—including cooperation in quantum computing; artificial intelligence; cyber-, hypersonic, and undersea technology; and more—are moving ahead more or less as planned. But a key component of AUKUS could be in serious trouble. Australia is supposed to begin receiving a small fleet of nuclear-powered submarines from the United States in 2032, and then the three countries are supposed to jointly design and produce a new class of submarine. Practical and strategic concerns, however, have put the submarine purchase and the design project in jeopardy; in June, the Pentagon commissioned a review to determine whether the entire AUKUS arrangement is in line with Trump’s “America first” agenda. Its findings are expected later this October, coinciding with Australian Prime Minister Anthony Albanese’s visit to Washington for his first substantive meeting with Trump.

At stake is more than the fate of a handful of submarines. AUKUS has become emblematic of the U.S.-Australian alliance as a whole, and it is now at risk of being weighed down by unfulfilled expectations on both sides. Whereas Australia wants constant reassurance from the U.S. administration that the agreement is moving ahead as planned, the United States wants firm pledges that any submarines it transfers to Australia will participate in a potential conflict with China. Neither country may be able to offer the other the confidence it seeks. Even if they choose to honor their original agreement, the uncertainty about the future of AUKUS has revealed a larger discrepancy between U.S. and Australian security strategies that the two allies will have to contend with in the years ahead.

Off The Fence

At its core, the AUKUS agreement is about nuclear-powered submarines. Although successive Australian governments have been reluctant to spell out publicly the strategic rationale for their acquisition, it is undoubtedly to enable Australia to assist the United States in any military contingency involving China in the South China Sea or the Taiwan Strait. Australia’s current fleet of six diesel-powered submarines is aging and needs to be replaced soon; nuclear-powered submarines are faster and can conduct operations of longer duration. As part of the AUKUS deal, the United States committed to transfer three to five Virginia-class nuclear-powered submarines to Australia by 2032, as long as Washington determines that their sale does not degrade U.S. undersea capabilities and that it remains in the American national interest. Australia has already contributed close to $2 billion to the U.S. submarine industrial production line to help speed construction. In addition, Australia, the United Kingdom, and the United States agreed to jointly design a new class of submarine, the SSN-AUKUS. For reasons never adequately explained, this vessel will be more than 25 percent larger in size than the Virginia-class submarine and will require more crew. The first is to be built in the United Kingdom, with subsequent production moving to Australia.

Since its announcement in September 2021, AUKUS has taken on a larger meaning than a mere submarine deal. It has become the prism through which Australians think and talk about the relationship with the United States. As Australian Defense Minister Richard Marles said in late 2023, when the U.S. Congress authorized key provisions of the agreement, AUKUS “will transform our ability to effectively deter, innovate, and operate together.” The agreement was a public relations coup when it was first signed, showcasing strong American support at a time of deep tension between Australia and China. In 2020, Conservative Prime Minister Scott Morrison’s government had openly challenged Beijing’s “wolf warrior” diplomacy and called for an independent inquiry into the origins of COVID-19. In response, China slapped sweeping trade restrictions on Australia. Unbowed, Australia styled itself as the “tip of the spear” as it condemned China’s assertive behavior in Asia and pushed back against Beijing’s economic coercion.

After coming into office in May 2022, Albanese dramatically improved Australia’s relations with China, abandoning his predecessor’s megaphone diplomacy and emphasizing stability and, more recently, “constructive engagement” with Beijing. Yet he has still plowed ahead with AUKUS, worried that any sign of slipping support for the deal will be interpreted by political opponents as weakness on national security and a sign that his Labor Party cannot manage the U.S. alliance. His government’s endorsement can often seem tepid, however. Albanese himself tends to talk more about the local employment opportunities of AUKUS than about the strategic benefits, and Foreign Minister Penny Wong barely mentions the deal in public and is known to oppose it in private.

Washington, meanwhile, typically sees Australia’s close economic relations with China as reason to doubt its commitment to the alliance with the United States. This is particularly the case under Labor governments, as the party has a long history of opposing U.S. security policies, from the installation of American intelligence facilities in Australia in the early 1960s to the invasion of Iraq in 2003. In June 2022, a few months into its term, the Albanese government sought to assuage Washington’s concern by secretly dispatching a special envoy to the White House to reassure the Biden administration of Australia’s steadfastness. It worked. President Joe Biden’s Asia policy chief, Kurt Campbell, told European officials privately in late 2022 that AUKUS had been about “getting Australia off the fence.” With the deal signed, he said, “we have them locked in now for the next 40 years.” But officials in the Trump administration are not so convinced, interpreting Albanese’s attempts to patch up relations with China as disregard for the security challenges that Beijing poses.

Sticking Points

Consistent with its approach to other allies in Asia and Europe, the Trump administration is now pushing Australia, in public and in private, to do more. U.S. officials want Canberra to increase its defense spending—speaking in Singapore earlier this year, Defense Secretary Pete Hegseth called for Australia to raise spending from around 2.0 percent to 3.5 percent of GDP—and to openly commit its forces to help defend Taiwan in the event of a Chinese invasion.

At the same time that Washington increases its demands from Canberra, Australian officials have been informed that the United States may ultimately renege on the promises it made to its ally in the AUKUS deal. The sticking point is whether the U.S. industrial base can produce nuclear-powered submarines quickly enough to transfer some to Australia. Currently, the United States produces a new submarine every ten months; it needs to produce one every five to six months to keep its own fleet intact while also selling vessels to Australia. U.S. law does not require the president to approve the transfer of Virginia-class submarines to Canberra until the end of 2031, well after the end of Trump’s term. But Washington may act much sooner. Undersecretary of Defense for Policy Elbridge Colby, who is leading the Pentagon’s AUKUS review, has been openly skeptical of the agreement because of the critical role that submarines play in the United States’ own military plans in Asia. Speaking at the British think tank Policy Exchange last year, he asked, “Why are we giving away this crown jewel asset when we most need it?”

Concerns are also mounting in Australia. Canberra worries about the United States’ reliability as a security partner, fearing that Australia may be left with no submarine capability at all if AUKUS fails. Prominent critics of the agreement, including former Prime Ministers Paul Keating and Malcolm Turnbull, along with various former submarine commanders and experts, have also raised practical concerns, including questions about Australian industry’s capacity to assume responsibility for building a fleet of nuclear-powered submarines by the early 2040s and, in the meantime, about whether a naval port under construction in Western Australia will be ready to host British and American nuclear-powered submarines when they are due to arrive on a military rotation in 2027. And according to recent opinion polling, public approval for AUKUS is wobbly: a Lowy Institute survey this year found that only around half of Australians think the deal will make Australia safer, and a Guardian Essential poll revealed that 60 percent of Australians think it unlikely that United States will ever deliver Virginia-class submarines.

Australia is increasingly uneasy about the cost of the deal, too, which is expected to be around $240 billion (and probably more) over the life of the agreement, through the late 2040s. Already, AUKUS is cannibalizing the budgets of Australia’s conventional forces as the government prioritizes funding for submarine production in the United States and the United Kingdom. So far, Albanese has been adamant that his government will raise Australian defense spending only to roughly 2.3 percent of GDP by 2032, an increase of less than half a percentage point, which will not be nearly enough to cover the additional expense of AUKUS. For at least the next several years, therefore, the Australian military could be unprepared to respond to any potential conflict. Indeed, it could do little more than what it has traditionally done: send a small deployment to operate alongside U.S. forces.

Stay Or Go?

The Trump administration could well choose to keep AUKUS intact for now, leaving the decision about selling the Virginia-class submarines to the next president. It could determine that Australia has paid into the U.S. industrial base sufficiently and that the benefits of access to joint intelligence and military facilities across Australia are valuable enough to allow the deal to proceed. Washington could conceivably prefer to lose a few submarines—sending them to Australia rather than reserving them for American use in a fight with China over Taiwan, for instance—rather than upset Canberra, which the United States needs on board if it is to use Australia as a base for U.S. force projection in the Indian Ocean and the South China Sea.

Preserving the terms of AUKUS, however, would not resolve Australia’s problems. The submarines may not arrive by 2032, a failure that would cast an ominous cloud over U.S.-Australian relations, feeding doubts about whether the Trump administration and its successors remain committed to keeping a firm military footprint in Asia. And even a prompt delivery of the vessels in the early 2030s would likely come with conditions that some of the submarines remain under U.S. command, since the United States will want to be able to use those vessels in the event of a conflict over Taiwan. Canberra would, in effect, be paying an eye-watering cost to provide auxiliary forces for the U.S. Navy, not gaining sovereign defense capabilities that it can command as it wishes. Such an outcome would make AUKUS seem like an immense strategic blunder: Australia would have spent years backing (and funding) the United States without receiving what it expected from the deal.

If Washington instead concludes that the enormous challenges it faces in expanding its own submarine fleet prevent it from honoring the promised transfer to Australia, the consequences could be just as dire. Australia’s faith in the United States’ reliability as an ally, already rocked by Trump, would be shaken even more, and the tremors would be felt in Manila, Seoul, Taipei, and Tokyo, too. Other forms of military cooperation with the United States may continue, including rotations of U.S. and British submarines at the base in Western Australia (assuming it is completed more or less on schedule), but the dark shadow cast over the relationship may lead to resentment toward the growing U.S. military presence in the country, which includes the stationing of B-52 bombers in northern Australia. And after wasting billions of dollars, Canberra could end up with shattered hopes of a defense industrial boom from production of a new class of submarines and no domestic submarine capability at all. Australia’s existing fleet of submarines is aging and requires costly, time-consuming refits to extend its service; only one of six vessels is currently operational. Replacing them will be no easier. Submarine suppliers are few, and Canberra has already burned its bridges with one of them—the French firm that Australia publicly dumped before AUKUS was announced. The possibility of Australia’s invasion by a hostile power remains remote, of course. But with no genuine submarine capability, long-standing national anxieties about the country’s geopolitical vulnerability—paranoia about China in particular—will likely intensify.

Uneasy Allies

Whether AUKUS succeeds or not, the debate about its future has revealed a fundamental disconnect between Australia and the United States. Washington has long assumed, but left unsaid, that Australia would join the United States in a potential war with China over Taiwan by providing bases for intelligence gathering and by conducting other military activities. That assumption has become explicit: last year, the Republican chair of the U.S. House of Representatives Foreign Affairs Committee, Michael McCaul, referred to Australia as “the central base of the Indo-Pacific to counter the China threat.” Yet even as AUKUS deepens Australia’s defense integration with the United States, neither major political party in Australia nor the country’s broader foreign policy community has confirmed in such stark terms that the alliance with Washington requires a firm commitment to participate directly in a war with China.

Australian officials do have an interest in Taiwan’s future, to be sure. Beyond concern about Taiwan itself, Australia does not want China further emboldened to assert itself all over East Asia and Southeast Asia. Yet Australia has a strong interest in avoiding war, too, given that any conflict could entail severe economic disruption because of the country’s dependence on the China market.

What Australian security elites want is the old American ally, the one to which they so often appealed as the guarantor of the rules-based order. And they want, more than anything else, ironclad guarantees that the transfer of the Virginia-class submarines will take place and that the United States will not retreat from Asia. They worry, however, that Australia’s much-prized access in Washington is slipping as Trump prioritizes great-power politics. For now, Australia is experiencing this loss as a trauma. The only way forward may be to accept that the United States today is simply not the ally Canberra is used to.