Don't Panic: The U.S. AUKUS Review Could Strengthen the Partnership

The Trump administration has ordered a review of AUKUS to be led by Undersecretary of Defense Policy Elbridge Colby. The review has some attendant risks, but also a potential upside for the three-way partnership.

Currently, the United States’ main point of contention is the commitment to sell and transfer three to five Virginia-class submarines to Australia’s navy, starting from 2032, under AUKUS’s optimal pathway. This stems from concerns around the U.S. defence industrial base’s capacity to deliver enough submarines to meet both the U.S. Navy’s and Australia’s requirements, at a time when U.S. attack submarine numbers are approaching a low point and its submarine industry is already struggling to fulfil the recapitalisation of the U.S. undersea nuclear deterrent force. Moreover, the Virginia class will have to continue in U.S. service for significantly longer than expected due to slow progress on delivering its successor, SSN-X.

The U.S. also has concerns about AUKUS partners’ capacity and commitment levels. Britain’s recent defence review and commitment to boost nuclear submarine production have eased doubts in the Trump administration. For its part, Australia has also made significant progress towards upskilling its submariners and defence workforce for the nuclear-propulsion challenges ahead. In February, Australia made its first direct financial contribution of U.S.$500 million (A$770 million) towards increasing U.S. submarine production capacity.

However, Washington has growing concerns about the general trajectory of Australia’s defence spending. Earlier this month, Hegseth made clear the U.S.’ expectation that Canberra lift its defence budget to 3.5 percent of GDP. While Minister for Defence Richard Marles initially indicated that the government was willing to have a ‘conversation’ around increasing Australia’s defence spending, Prime Minister Anthony Albanese appeared more reluctant to enter into new commitments, based on recent remarks.

On the Virginia transfer, in essence, the Trump administration needs to convince itself that the effect of transferring several submarines from the U.S. Navy’s order of battle is outweighed by the longer-term gains of access to forward basing and new maintenance facilities in Western Australia. This access would be a strategic gain for the U.S., as it would strengthen U.S. submarine presence in the Indo-Pacific priority theatre and support greater interoperability with Australia and with Britain, which has committed to forward deploying one of its attack submarines to HMAS Stirling from 2027.

On the more political issue around AUKUS complying with Trump’s ‘America First’ agenda, Australia’s ongoing cash infusions into the U.S. defence industrial base should be appealing to the president, though the review could potentially recommend a higher price tag than the U.S.$3 billion (A$4.5 billion) that Canberra has committed to. The U.S. is also likely to press for a more focused and energetic commitment to Pillar Two.

Rather than overreact to the U.S. government’s decision to review AUKUS, Australia should see it as an opportunity to make the strategic and political case for the partnership in Washington. In the future, Australia could consider launching its own review into AUKUS, including the opportunity costs it may present for Australia’s defence capability in the nearer term.

Euan Graham is a senior analyst as ASPI.

This article appeared originally at The Strategist (ASPI).