Musk to review US submarines as tariffs threaten costs of AUKUS

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Musk to review US submarines as tariffs threaten costs of AUKUS

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 deal 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.

Under the AUKUS deal, which will cost Australian taxpayers $368 billion over 30 years, Australia will acquire three Virginia-class submarines from the US and build five new nuclear-powered attack submarines. But Tim Kaine, the senior Democrat on the Senate Armed Services Subcommittee on Seapower, told an AUKUS dinner in Washington that Trump’s tariffs undermine the deal because of the large number of products that must be traded to properly integrate the three nations’ defence industries.

Meanwhile, Trump signed an executive order aimed at boosting America’s commercial and military shipbuilding industry. Musk, as leader of the White House’s Department of Government Efficiency, has been ordered to review and improve the vessel procurement processes. The order does not refer to AUKUS but directs offices to pursue “all available incentives to help shipbuilders domiciled in allied nations partner to undertake capital investment in the US.”

It comes as the White House was forced to clarify that Trump’s tariffs on Chinese goods are at least 145 per cent, not 125 per cent as the world was led to believe yesterday, as sharemarkets resumed their plunge. Trump also said countries he initially hit with a 10 per cent tariff, such as Australia and the UK, could negotiate the rate lower depending on what they offered the US.