Published by Global Banking and Finance Review
Posted on June 11, 2025
By Phil Stewart, Idrees Ali and David Brunnstrom
WASHINGTON (Reuters) -U.S. President Donald Trump's administration has launched a formal review of a defense pact worth hundreds of billions of dollars that former President Joe Biden made with Australia and the United Kingdom, allowing Australia to acquire conventionally armed nuclear submarines, a U.S. defense official told Reuters.
The formal Pentagon-led review is likely to alarm Australia, which sees the submarines as critical to its own defense as tensions grow over China's expansive military buildup.
It could also throw a wrench in Britain's defense planning. AUKUS is at the center of a planned expansion of its submarine fleet.
"We are reviewing AUKUS as part of ensuring that this initiative of the previous administration is aligned with the President's America First agenda," the official said of the review, which was first reported by Financial Times.
"Any changes to the administration's approach for AUKUS will be communicated through official channels, when appropriate."
AUKUS, formed in 2021 to address shared worries about China's growing power, is designed to allow Australia to acquire nuclear-powered attack submarines and other advanced weapons such as hypersonic missiles.
Vocal skeptics of the AUKUS deal among Trump's senior policy officials include Elbridge Colby, the Pentagon's top policy advisor.
In a 2024 talk with Britain's Policy Exchange think-tank, Colby cautioned that U.S. military submarines were a scarce, critical commodity, and that U.S. industry could not produce enough of them to meet American demand.
They would also be central to U.S. military strategy in any confrontation with China centered in the First Island Chain, an area that runs from Japan through Taiwan, the Philippines and on to Borneo, enclosing China's coastal seas.
"CROWN JEWEL"
"My concern is why are we giving away this crown jewel asset when we most need it," Colby said.
The Australian and UK embassies in Washington did not immediately respond to a request for comment.
The U.S. National Security Council also did not immediately respond to a request for comment.
AUKUS is Australia's biggest-ever defense project, with Canberra committing to spend A$368 billion ($240 billion) over three decades on the program, which includes billions of dollars of investment in the U.S. production base.
News of the U.S. review comes hours after the British government announced plans to invest billions of pounds to upgrade its submarine industrial base, including at BAE Systems in Barrow and Rolls-Royce Submarines in Derby, to allow the increase in submarine production rate announced in Britain’s Strategic Defence Review.
Britain said this month it would build up to 12 next-generation attack submarines of the model intended to be jointly developed by the UK, U.S. and Australia under AUKUS.
Only six countries operate nuclear submarines: the U.S., the UK, Russia, China, France and India.
AUKUS would add Australia to that club starting in 2032 with the U.S. sale of Virginia-class submarines. Before that, the U.S. and Britain would start forward rotations of their submarines in 2027 out of an Australian naval base in Western Australia.
Later, Britain and Australia would design and build a new class of submarines, with U.S. assistance, with the first delivery to the UK in the late 2030s and to Australia in the early 2040s.
Although Australia has declined to say ahead of time whether it would send the submarines to join U.S. forces in any conflict between the U.S. and China, Colby noted Australia's historic alliance with Washington, including sending troops to Vietnam.
"I think we can make a decent bet that Australia would be there with us in the event of a conflict," Colby said last year.
Speaking in Congress on Tuesday, Defense Secretary Pete Hegseth said "we're having honest conversations with our allies."
On Australia, Hegseth said: "We want to make sure those capabilities are part of how they use them with their submarines, but also how they integrate with us as allies."
Former Australian Prime Minister Malcolm Turnbull, who signed a previous agreement to acquire French submarines that was shelved in favor of AUKUS, told CNBC last week it was "more likely than not that Australia will not end up with any submarines at all, but instead, simply provide a large base in Western Australia for the American Navy and maintenance facilities there."
(Reporting by Phil Stewart and Idrees Ali, Additional reporting by David Brunnstrom in Washington and Mrinmay Dey in Bengaluru; Editing by Don Durfee and David Gregorio)
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