Aukus review puts spotlight on dramatic decline of US arms manufacturing

America's difficulties in producing subs and armaments arose in part from Reagan-era decisions.

- Denny Roy

The US government's decision last month to review the Aukus agreement has shaken the British and Australian governments—while also energising Australian opponents of the deal, who see this as an opportunity for Canberra to back out.

Under the agreement, the US would provide Australia with three to five Virginia-class attack submarines while the three countries jointly develop a new Australian submarine for the 2040s.

Superficially, the US review will evaluate whether Aukus, a security agreement signed in 2021 during the Biden administration, is consistent with the Trump administration's "America First" agenda.

There are two substantial concerns. First, the US government has doubts about whether Australia would be willing to send its submarine fleet north of Indonesia to join a hypothetical military action against China. If not, keeping any newly built submarines in US rather than Australian hands might have greater deterrent value against Chinese aggression in the Taiwan Strait or the South China Sea.

Second, Washington wonders if it can build enough submarines to spare any for Australia. In 2024, Mr Elbridge Colby said the US military itself had too few submarines, and should not be "giving away this crown jewel asset when we most need it". Mr Colby, now President Donald Trump's Undersecretary of Defence, will lead the review.

The latter concern focuses attention on the dramatic decline of America's military manufacturing capacity.

Shipbuilding is a prominent example. From 1942 to 1945, the US produced 17 full-sized aircraft carriers, plus another 80 smaller carriers. At the end of World War II, the US accounted for 60 per cent of the world's shipbuilding. By 2023, however, China's shipbuilding capacity was reportedly 232 times that of the US. The People's Liberation Army Navy launched 15 large surface warships in 2024, compared with two for the US Navy.