Australia is facing a serious warning. The cost of new submarines it plans to buy under the AUKUS defense deal could go up because of trade tariffs introduced by former US President Donald Trump.
Tariffs Could Increase the Cost of Australian Submarines
These tariffs are taxes placed on goods like steel and aluminum imported from other countries. But the problem is, many of the materials used to build submarines come from countries like Canada and the United Kingdom—nations that are being hit by these US tariffs.
Virginia Senator Tim Kaine, a top Democrat in charge of ship and submarine policies, shared this concern during a dinner event in Washington, D.C. He explained that about 35% of the steel and aluminum used in US shipbuilding comes from partner countries, including Australia’s close allies.
If the prices of those materials rise, it could make submarine construction even more expensive and delay the entire process.
Kaine said that building submarines is already slow and costly. Adding more costs would only make things worse. This is a problem because the US needs to build submarines faster.
AUKUS in Peril: US Struggles to Deliver 41st Virginia-Class Submarine Amid $3.2B Crisis
Currently, the country can build just over one Virginia-class nuclear-powered submarine a year. But to meet its promise to sell three of these submarines to Australia in the 2030s, the US must double its output. If it fails, any US president at that time could cancel the deal.
Musk Assigned to Improve Shipbuilding Process
In a surprising move, Donald Trump has now asked Elon Musk to help review how the US builds its submarines. Musk, the head of Tesla and SpaceX, has also been leading a new White House department called the Department of Government Efficiency. Trump signed an official order telling Musk’s team to look into how ships are being built and suggest ways to make the process better and faster.
While the order did not specifically mention Australia or AUKUS, it was aimed at increasing America’s capacity to produce more submarines and other vessels. It also encouraged partnerships between the US and companies in allied countries to invest in improving shipbuilding in the US.
This comes at a time when Australia is preparing to spend a massive $368 billion over the next 30 years as part of the AUKUS deal. The plan includes buying three Virginia-class submarines from the US and building five new nuclear-powered submarines with the help of both the US and UK. As part of its commitment, Australia has already sent $3 billion to support the US submarine industrial base, including $500 million earlier this year.
But there are now questions about whether that money is enough. US officials, including Acting Assistant Secretary of Defense for Indo-Pacific Security Affairs John Noh, have said that while America appreciates Australia’s contribution, “there’s more that needs to be done.”
Second Pillar of AUKUS Criticized as Unfocused
The AUKUS agreement has two parts. The first part is about building and sharing nuclear-powered submarines. The second part focuses on sharing military technology and data. But officials say this second part is too broad and lacks clear goals.
Senator Tim Kaine said the three countries should focus on just a few key areas instead of trying to do everything. Former UK Defense Secretary Michael Fallon agreed and said this would help deal with threats from countries like China.
Another problem is that the US is only sharing 70% of its military technology. Australia’s ambassador, Kevin Rudd, said Australians would keep pushing for full access.
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In the UK, a parliamentary inquiry has been launched to check if AUKUS is on track. In the US, some lawmakers are upset about tariffs on Australian goods. Congressman Adam Smith said it’s wrong to treat allies like enemies. Joe Courtney added that while Australia is investing billions in the US, it’s still being hit with trade penalties.
Even though US officials say relationships remain strong, many agree that fixing tariffs and production issues is important to keep AUKUS working properly.