Musk to review US submarines as Australia warned tariffs could push up cost

Washington: Australia has been warned Donald Trump’s tariffs could push up the cost of submarines due to be acquired under the AUKUS defence pact, as Trump tasks Elon Musk’s team with improving the US capacity to build the boats.

Advocates of the agreement also say the second pillar of the pact, under which Australia, the US and the UK share military data and technology, lacks focus, should be narrowed to more manageable initiatives, and that politicians need to do more to champion AUKUS to sceptical voters.

A digital mock-up of a Virginia-class submarine.Credit: ADF

Virginia senator Tim Kaine, the senior Democrat on the Senate Armed Services Subcommittee on Seapower, said 35 per cent of the steel and aluminium that went into ships and submarines came from partners such as Canada and the UK, which have both been hit with US tariffs.

“We are already having trouble getting these ships and subs on time [and] on budget. Increase those prices – it’s going to be a problem,” Kaine told an AUKUS dinner in Washington on Wednesday night hosted by former Australian defence minister turned lobbyist Christopher Pyne.

The United States produces Virginia-class nuclear-powered submarines at a rate of 1.1 a year and needs to increase production to 2.3 a year to fulfil its obligations to sell Australia the boats in the 2030s. The president of the day can veto the sale if those targets are not being met.

The AUKUS pact will cost Australian taxpayers $368 billion over the next 30 years. Under the deal, Australia will acquire three Virginia-class submarines from the US and build five new nuclear-powered attack submarines.

Donald Trump has asked Elon Musk to find improvements in US shipbuilding.Credit: AP

Kaine said Trump’s tariffs undermined AUKUS because of the large number of products that must be traded to properly integrate the three nations’ defence industries.

“[Tariffs] slow us down and make things harder,” he said, adding they also sent a bad message to allies. “Allies are friends, and when you treat friends badly in trade, it just puts a cloud over the entire relationship.”

Kaine, who described himself as the biggest fan of AUKUS in the US Senate, warned that the second pillar of the program was potentially unwieldy.

“The sky’s the limit, and there are unlimited things we could do together – what it needs is some definition and some choices,” Kaine said. Instead of saying “we can do everything”, he said, “let’s pick two or three things and just say we’ll go after those two or three things and do them well”.

Former British defence secretary Michael Fallon agreed the second prong of AUKUS would benefit from “perhaps cutting back on some of the range of activities and concentrating on those technologies that really will keep us ahead of our adversaries”.

The comments reflect widely shared frustrations about bureaucracy and regulations slowing down the pact at a time of increasing geostrategic competition with China.

In particular, the US has only agreed to share about 70 per cent of the relevant military data and technology. Australia’s US ambassador, Kevin Rudd, told a defence conference this week: “We’ll still chip away at the remaining 30 per cent; we’re a persistent bunch of bastards in Australia.”

Fallon said the UK had to speed up its submarine design and improve its supply chains, while politicians in Australia and Britain needed to “fully understand and defend the budgetary consequences of our submarine program as it matures”.

The USS Minnesota, a Virginia-class submarine, sails off Western Australia last month.Credit: Getty Images

He also warned that “reassurance measures” may be needed in case the US submarine program did not accelerate in the way AUKUS envisaged.

Meanwhile, Trump signed an executive order aimed at pumping up America’s commercial and military shipbuilding industry, fulfilling a pledge he made during a major speech about six weeks ago.

Elon Musk, the world’s richest man and leader of the White House’s Department of Government Efficiency, was ordered to review the vessel procurement process and deliver a proposal to Trump “to improve the efficiency and effectiveness of these processes”.

The order did not reference AUKUS or Australia but directed offices to pursue “all available incentives to help shipbuilders domiciled in allied nations partner to undertake capital investment in the US to help strengthen the shipbuilding capacity of the US”.

As part of AUKUS, Australia has committed to giving $US3 billion ($4.85 billion) to the US submarine industrial base, of which $US500 million was handed over in February. However, there are questions over whether the US will seek more.

At a House Armed Services Committee hearing on Wednesday (Thursday AEST), acting assistant secretary of defence for Indo-Pacific security affairs John Noh said the US was grateful for Australia’s contribution. But he noted Defence Secretary Pete Hegseth had said “there’s more that needs to be done”.

Noh also faced questions from Democrats about why the Trump administration had hit Australia with a 10 per cent tariff, given it was an ally and defence partner.

“We have launched a trade war against every single one of our partners in the Asia region,” congressman Adam Smith said. “Even in the case of Australia. We have a trade surplus with Australia, but we’re going to shoot at them too.”

Democratic congressman from Connecticut Joe Courtney, who co-chairs the Friends of Australia Caucus, said: “They’re putting money into our industrial base, and yet we are tariffing Australia at the same level as the country of Iran.”

Australian MPs had taken notice, Courtney told the hearing. “We are just pushing people in the wrong direction in this part of the world.”

Noh said from everything he had seen, “our relationships with our allies and partners in the region are strong and remain strong”.

Last week, the British House of Commons Defence Committee announced a parliamentary inquiry into the AUKUS pact to evaluate whether the program was on track and consider the impact of geopolitical shifts since the deal was signed in 2021.

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