Australia woke up to the significant news that the Trump administration is reviewing the AUKUS agreement, sending shockwaves through political and defence circles.
Defence Minister Richard Marles responded with composed assurance, stating that Australia has been aware of the impending review for several weeks. He described the move as “natural and understandable,” explaining that the new administration was simply taking a closer look at the submarine deal.
While the review doesn’t necessarily spell the end for AUKUS, it has triggered intense debate. Supporters have come forward to defend the pact, while critics argue this could be a strategic opening for Australia to exit what they see as a risky commitment.
There are growing signs that the Trump administration is using the review to pressure Australia on defence spending — putting Prime Minister Anthony Albanese in a potentially difficult position ahead of a likely meeting with Donald Trump.
What Will the Review Examine?
So far, details about the review remain limited. According to a Pentagon official, the goal is to ensure the deal aligns with Trump’s “America First” priorities, including maintaining high military readiness and ensuring that the US defence industry meets domestic needs.
The review will be led by senior official Elbridge Colby, a known sceptic of AUKUS, though his tone has softened since assuming office. During his confirmation hearings, Colby emphasized that the US could only proceed with transferring nuclear submarines to Australia if domestic submarine production increased to satisfy American military needs.
Currently, US shipyards produce about 1.2 nuclear-powered submarines annually, but that number must rise to 2.33 per year by 2028 before the US can spare any for Australia. Only then would second-hand Virginia-class submarines begin to be delivered.
Euan Graham from the Australian Strategic Policy Institute stated that the US needs to be convinced that short-term losses to its naval capabilities are outweighed by long-term gains in cooperation and regional presence. He added that backing from both the US Navy and Congress will be essential.
Conversely, scrapping the agreement could damage US credibility. Analyst Richard Fontaine pointed out that all three AUKUS nations have already invested heavily—both financially and diplomatically—and pulling out now would hurt relations, particularly with Australia. This may be why some Australian officials remain cautiously optimistic that the Trump administration won’t walk away from the pact.
Is AUKUS Just About Submarines?
While submarines are central to the deal, the review also reflects broader strategic concerns. The Pentagon said the process will evaluate whether allies are making adequate contributions to collective defence.
Both Defence Secretary Pete Hegseth and Elbridge Colby have recently called for a substantial increase in Australian defence spending. By linking the review to spending, the US appears to be leveraging AUKUS to push for a greater Australian commitment to the alliance.
Some Australian lawmakers believe Trump may demand that Australia pour more funding into the US submarine supply chain. It remains unclear whether Albanese will meet Trump during the upcoming G7 summit in Canada, but if they do, AUKUS and defence funding will likely be key topics.
The timing of the review’s leak—just before the possible meeting—suggests the Trump administration is applying pressure.
Will Australia Recover Its Multi-Billion Dollar Payments?
If AUKUS falls apart, Australia would face significant financial losses with little to show. Last year, Australia began making multi-billion-dollar payments to both the US and UK to support submarine industry expansion. This included a $768 million payment to the US, as part of a larger $4.7 billion pledge for second-hand submarines expected in the 2030s.
Australia also agreed to pay $4.6 billion to the UK for the future SSN-AUKUS fleet. However, government officials have been vague about whether those funds are refundable if the deal collapses.
Greens Senator David Shoebridge also noted that Australia is investing $1.7 billion to construct a US nuclear submarine base near Perth, set to open in 2027 — another major cost if the pact fails.
Does Australia Have a Backup Plan?
Since former Prime Minister Scott Morrison scrapped Australia’s agreement with France in favour of AUKUS, the nuclear submarine plan has been central to the Defence Department’s strategic vision.
Despite growing uncertainty, Defence Minister Marles has rejected calls to prepare an alternative strategy should the US withdraw. If AUKUS falls through, options are severely limited.
France is unlikely to revive the abandoned Attack-class submarine program, and Germany, overlooked in 2016, has indicated its shipyards are at capacity.
Australia could attempt to reopen negotiations with Japan, revisiting a Soryu-class submarine proposal made over a decade ago. However, without AUKUS, Australia would face a severe capability gap — with ageing Collins Class submarines nearing obsolescence at a time of rising regional tensions and strategic instability.
