U.S. Defence Export Strategy Has a Credibility Problem

A dimming outlook for U.S. defence exports in Europe – outlined by Bill Sweetman in a 24 March Strategist article – should raise concerns for the viability of the Trump administration’s defence export strategy.

President Donald Trump isn’t the first to use defence exports as a policy lever. For many decades, U.S. presidents have generally recognised that keeping domestic production lines hot by selling arms to your allies is a win-win. But traditionally – including in the first Trump administration – foreign policy has been in the driver’s seat, with industrial policy secondary. By contrast, the America First Arms Transfer Strategy, announced in February, puts industrial policy outcomes first. The plan, in outline, is this:

This probably sounded good in the Oval Office: now that we’ve pushed our allies and partners to spend more on defence, convince them to buy American. The possibility that the allies and partners might now be less receptive to a prospective U.S. sales catalogue, that they might even wish to reduce their dependence on U.S. arms imports – well, that won’t sound as good. Yet here we are.

Europe now wants to buy more European. Saudi Arabia wants to diversify. The United Arab Emirates wants to compete. The notion that any of these would totally decouple from the U.S. is far-fetched, but for each of them policy is aiming in a clear direction: major security partners want less, not more, dependence on the U.S. production lines the White House wants to steer their demand towards. That is the first credibility problem for the U.S. arms export policy.

The other’s on the supply side. One of the administration’s key industrial policy goals has been to discipline the market power enjoyed by the five biggest prime contractors – Lockheed Martin, Raytheon, Boeing, General Dynamics and Northrop Grumman. The administration wants more entrants to market, more competition, more innovation and better capability delivery. That aim is written into the America First Arms Transfer Strategy. It’s also written into Executive Order 14372, issued in January, which creates a suite of disciplinary measures the White House can use on defence contractors it deems to be underperforming. One of those is a threat to cease official advocacy for a contractor’s products overseas.

That threat may be toothless. There are many military systems that the U.S. military can’t do without and that are effectively guaranteed to be on its sales catalogue, such as the AGM-158 family of cruise missiles. For these systems, the U.S. frequently has a choice between one prime contractor and nothing. If Lockheed Martin incurs the White House’s displeasure (by delivering F-35s late, perhaps), ceasing overseas advocacy for AGM-158 sales would achieve little aside from lowering potential production and driving up the Pentagon’s own costs.

The administration’s assumptions about how much leverage it has over foreign demand and domestic supply are questionable. High-end U.S. platforms will still be coveted overseas whatever the White House does, but that in turn complicates its plan to ‘supercharge’ the U.S. defence industrial base through improved market discipline.

If demand will be pointed at a priority list of operationally relevant weapons and platforms, we can expect many to be built by the primes. If the harder punitive measures outlined in Executive Order 14372 run aground in the courts, which is not unlikely, then future contract underperformance by the primes will leave the Trump administration’s export strategy having handsomely rewarded the very contractors it wanted to discipline.

Linus Cohen is a researcher at ASPI.

AI contributed no ideas to this article – Linus Cohen.

This article appeared originally at The Strategist (ASPI).