The US’s new game reduces our AUKUS push to a mere bid for attention
Turbulence characterises the international political order in the second Trump administration. He unleashed a barrage of tariffs in the first three months of his presidency, raising the average effective tariff rate from 2.5 per cent to an estimated 27 per cent—the highest level since 1903 (see Yale Budget Lab, ‘The fiscal and economic effects of the revised April 9 tariffs’). Ostensibly a reaction to US trade deficits, he applied a 10 per cent tariff to Australia even though the US runs a trade surplus with it. There was an emotional quality to the reaction in Australia. What about all those wars of choice Australia has fought alongside the US? What happened to all that talk of mateship? Cameron Stewart, The Australian newspaper’s chief international correspondent, called the tariffs ‘further evidence, if any was needed, that Trump pays little or no heed to the notion of alliances, loyalty or friendship’ (‘Dark day in world trade as Trump’s voodoo tariffs hurt everyone’, The Australian). Prime Minister Anthony Albanese said they were ‘not the act of a friend’ (Stephanie Smail, ‘PM slams ‘unfriendly’ US tariffs’, ABC Radio, The World Today).
Here are some facts to accompany the pathos: despite the upheavals, the US economy remains as powerful and alluring to foreign investors as ever. Soon after the tariffs were imposed in March and April 2025, Australian Super, Australia’s largest superannuation fund, said it would continue to invest more than half its A$367 billion in assets in the United States. Mark Delaney, its chief investment officer, informed the Financial Times that ‘strong productivity growth, strong profit growth and, by any measure, many of the best companies in the world’ made the United States ‘an attractive place to store capital’. The tariffs were a ‘significant volatility event’, but they would not change the fund’s exposure in the United States (‘US remains the best place to invest overseas, says AustralianSuper’s CIO’, Financial Times Europe, 11 Apr 2025). Delaney is correct: the United States imports more manufactured goods than it exports, but it runs a massive trade surplus in financial services, education, health, finance, law, accounting and entertainment. It exported US$1.02 trillion in 2023, up 8 per cent from a year earlier. It has a surplus of US$278 billion, a trend stretching back at least two decades (see Megha Bahree, ‘The trade surplus that Trump never mentions’, Al Jazeera). Services make up about 70 per cent of the US economy. ‘America is the China of banking’, as the Wall Street Journal put it (see Telis Demos, ‘How long will big U.S. banks continue to lead the world? Wall Street Journal).
A Blend of Strategy and Personality
Trump knows all this, of course; his pre-presidential career was spent in real estate, tourism and entertainment ventures, all of which are included in the services sector. A blend of strategy and personality is at work. At the level of strategy, he wants to show his voting base that he is fighting for them. As Gary Huffbauer at the Peterson Institute for International Economics said, ‘he thinks he can get more popular approval by talking about deficits in manufactured goods’ (The trade surplus that Trump never mentions, Al Jazeera). Huffbauer pointed to the auto worker whom Trump brought along when he made his tariff announcement as a visible example of his concern for the US working class. He wants to construct a new Republican political alignment, capturing a core electoral pillar of the Democratic Party. He knows that more than forty years of hyper-globalisation have led to the deterioration of American society.
A year before his first election victory in 2016, the economists Anne Case and Angus Deaton had documented a phenomenon unknown outside war-torn societies—rising mortality rates among middle-aged, white, non-Hispanic Americans. The increase was due to ‘deaths of despair’—suicide, drug and alcohol poisoning, chronic liver disease and cirrhosis. Those with less education saw the most marked increases in early death rates and addiction (see Anne Case and Angus Deaton, ‘Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century’. Proceedings of the Natural Academy of Science (PNAS) USA. 2015 Dec 8;112(49):15078–83). Trump spoke directly to them when he said at his first inauguration in January 2017, ‘The forgotten men and women of our country will be forgotten no longer’. He promised to end the ‘American carnage’ (Donald Trump, Inaugural Address, 20 January 2017). Before his comeback victory in 2024, Republican pollster Patrick Ruffini discussed the mounting evidence of a pro-Trump working-class electoral coalition, predicting that it would ‘not only endure but will expand and lend its support to Republicans other than Trump’ (Patrick Ruffini, ‘The emerging working-class Republican majority, Politico). The tariffs show his blue-collar base that he is fighting for them. He wants to construct a new Republican political alignment, capturing a core electoral pillar of the Democratic Party.
At the level of personality, Trump has long been obsessed with tariffs. In the 2000 campaign, when he was briefly a candidate for the Reform Party nomination, he said Japan was ‘ripping us big league’, Germany ‘want[ed] to take over the world economically’, and France needed ‘to be taught respect’ (Over four decades, Trump’s one solid stance: a hard line on trade. Washington Post). As far back as 1987, Trump paid for full-page advertisements in the Washington Post, the New York Times and the Boston Globe, stating, ‘There’s nothing wrong with America’s Foreign Defence Policy that a little backbone can’t cure’ (Donald Trump, An open letter from Donald J. Trump on why America should stop paying to defend countries that can afford to defend themselves, New York Times, 2 September 1987, A28). His track record of consistent statements gives him authenticity now that he utters them with the power of the presidency. Trump is trying to prevent Chinese firms from dodging tariffs by setting up operations in third countries. China runs a US$2 trillion manufacturing surplus. Its exports to Southeast Asia are inputs into ASEAN’s exports to the United States that get around the tariffs. These are ‘connector’ economies linking China’s huge factory floor to the US market. As Deutsche Bank analysts wrote in a report after the tariff announcement, ‘In many ways, Liberation Day was designed to create a tariff wall around China, by disproportionately penalising the connector economies’ (see ‘U.S.-China brawl takes center stage in global trade war’, Wall Street Journal, 9 April 2025). His Treasury Secretary Scott Bessent explained to the business press, ‘We can probably reach a deal with our allies… and then we can approach China as a group’ (see Daniel Flatley, ‘Bessent sees a deal with allies, then group approach on China’, Bloomberg, 9 April 2025).
Containing China
Trump’s focus on China stems from a recognition that the global order must be restructured in US interests once again. What his tariffs seek to do economically, his military strategy aims to do geographically—contain China inside its semi-enclosed seas. Taiwan, on the edge of mainland China’s continental shelf, is described by US policy planners as ‘a critical node within the first island chain…from the Japanese archipelago down to the Philippines and into the South China Sea…anchoring a network of US allies and partners’ (see E. Ratner, ‘Statement before the United States Senate Committee on Foreign Relations’, 8 December 2021). China cannot reach the western Pacific Ocean without going through the Miyako Strait north of Taiwan or the Luzon Strait south of Taiwan. Both are within range of US forces in Japan and the Philippines, respectively. The Trump administration wants the ability to coerce China in the event of a crisis. Australia’s foreign and defence policies are highly relevant to this objective. Trump’s rhetoric may be new, but his instincts are well within the mainstream of US strategic planning.
United States General Douglas MacArthur’s farewell speech to the US Congress in 1951 is remembered today for its conclusion (‘Old soldiers never die; they just fade away’). The most important part of that speech had to do with dominating the Pacific Ocean all the way to the Asian landmass:
We control it [the Pacific Ocean] to the shores of Asia by a chain of islands extending in an arc from the Aleutians to the Marianas held by us and our free allies. From this island chain we can dominate with sea and air power every Asiatic port from Vladivostok to Singapore and prevent any hostile movement into the Pacific.
(Douglas MacArthur, Address to Congress, 19 April 1951. Library of Congress)
He expressed an assumption that is usually unstated: ‘Dominating with sea and air power every Asiatic port from Vladivostok to Singapore’ is benign and defensive if the United States does the dominating: ‘Under such conditions’, he said, ‘the Pacific no longer represents menacing avenues of encroach for a prospective invader—it assumes instead the friendly aspect of a peaceful lake.’ Taiwan (Formosa) was critical to US dominance of the region: ‘under no circumstances must Formosa fall under Communist control’. He had previously described Taiwan as ‘an unsinkable aircraft carrier and submarine tender’ (see D. MacArthur, ‘Memorandum on Formosa, 14 June 1950’, Foreign Relations of the United States 1950, vol. VII, Korea). US strategy is to position its bases and forces as close to the edge of China as possible.
What would happen if China controlled Taiwan, just 100 miles from its coast? According to MacArthur, the US, 5,000 miles away, would be threatened: ‘Such an eventuality would at once threaten the freedom of the Philippines and the loss of Japan, and might well force our Western frontier back to the coasts of California, Oregon and Washington’. To accept this pronouncement as an objective analysis of reality, one would have to accept that the United States feels secure only if it can ‘dominate with sea and air power every Asiatic port from Vladivostok to Singapore’. Happily, Australian policy planners accept this view and share it, too. However, the word to use nowadays is not ‘domination’ but ‘deterrence’. ‘Deterrence’ has a non-ideological meaning, but it is often used as a euphemism for dominance. If China claimed it was ‘deterring’ Australia by conducting non-stop surveillance and intelligence collection patrols just off the coast of Fremantle or Sydney, others would recognise ‘deterrence’ as a euphemism for ‘dominance’. The same logic applies when Australia’s politicians claim they are ‘deterring’ China in waters very close to its coastline, oblivious to the consequences of the positions they advocate (see Luke Gosling, Deterring at a distance: The strategic logic of AUKUS, Lowy Institute, 24 June 2024).
A forward operational deployment of the US Navy
The chatter about nuclear-powered submarines, which Australia plans to acquire under the AUKUS agreement, distracts from perhaps the most important force posture initiative of the United States in the Indo-Pacific—the creation of Submarine Rotation Force–West (SRF-W) at Garden Island, near Fremantle in Western Australia. Australia has committed A$8 billion to upgrade the wharves, maintenance facilities, and logistics infrastructure. The spin doctors describe SRF-W as an ‘optimal pathway’ for AUKUS. In fact, it is a forward operational deployment of the United States Navy, independent of AUKUS, not a downpayment on Australia getting its own Virginia-class submarines. In the public’s mind, the two are erroneously believed to be the same thing. The AUKUS boats may never arrive, but Submarine Rotation Force–West will remain as an operational forward deployment of the US Navy.
During the Pacific phase of World War II, about 170 Allied submarines were based in that location, with quick access to the Indian Ocean and the Malacca, Lombok and Sunda Straits in the archipelago to Australia’s north. They were able to destroy enemy shipping. Submarine Rotation Force—West is a potential threat to China because it can interdict and undermine Chinese energy imports, which must pass through the chokepoint that is the Strait of Malacca after making the long transit across the Indian Ocean. Former president Hu Jintao called it the ‘Malacca dilemma’ because he recognised that China is vulnerable to having its energy flows choked off there. The base in Western Australia will become one of the most valuable locations for the United States, supporting sustainment, maintenance, repair and mission planning. As Michael McCaul, the chair of the House Foreign Affairs Committee in the US Congress, said, Australia is ‘a central base of operations from which to project power’ (‘Australia offers U.S. a vast new military launchpad in China conflict’, Washington Post, 24 August 2024).
Michael Pezzullo, an Australian strategic analyst and former policy planner, acknowledged that deterrence is an euphemism. ‘We’re actually so hardwired, in some cases going back decades, into what euphemistically is called US deterrence’, he said (Pezzullo: ‘Labor has “picked a side” in war with China, Saturday Paper, 31 August 2024). He noted that US forces would not be coming to Australia at the start of a potential crisis with dummy rounds but with their assigned war load. Logically, that would likely include nuclear weapons. He called for a more open discussion with Australians about the implications. (Don’t hold your breath.)
Demonstrating Relevance—the Strategic Logic of AUKUS
Australian policy planners know that Australia could become a target if key US assets are stationed here—but that is not their greatest concern. Rather, they strive to show their relevance to American policymakers precisely because they know how little Australia features in US thinking. AUKUS and the rest of the military build-up in Australia ensures that the United States pays greater attention to Australia in its own self-interest.
All this fits comfortably into the trajectory of Australian defence policy. The Royal Australian Navy did not try to develop a balanced force in the years after World War II. Instead, it focused on anti-submarine warfare to support US naval strategy. Australia converted ‘Q’ Class destroyers to ‘Q’ Class anti-submarine frigates in the 1950s. It conducted comprehensive research on anti-submarine warfare technology, producing the Ikara ASW missile, the Mulloka sonar and the Barra sonobuoy. The aircraft carrier HMAS Melbourne used Fairey Gannet and Grumman Tracker aircraft and Westland Wessex and Westland Sea King helicopters in the anti-submarine role. The idea, then and now, was inter-operability—operating inside the strategy of a superpower by contributing a well-chosen, niche capability to augment the larger force (see Lewis Frederickson’s PhD thesis, The development of Australian infantry on the Western Front 1916–1918: An imperial model of training, tactics and technology, UNSW Canberra, 2015, p. 135).
There is nothing new about a system in which the imperial power provides global maritime supremacy, sub-imperial powers such as Australia contribute forces as needed, and the entire imperial system cooperates during a general war or a major international crisis. This system used to be called Imperial Defence. As the Minister for Defence, Joseph Cook, told Parliament in 1909: ‘We must remember, first of all, that Australia is part of the Empire, and that within our means we must recognise both our Imperial and local responsibilities. The Empire floats upon its fleet. A strong fleet means a strong Empire, and therefore it is our duty to add to the fleet strength of the Empire’ (see Joseph Cook, 29 November 1909, in Peter Dennis, et al., eds, 1995 book The Oxford Companion to Australian Military History, p. 517). Cook could have been speaking about AUKUS in 2025, apart from the word ‘empire’, which has its own euphemism today—a ‘rules-based international order’ (see my 2022 book, Sub-Imperial Power, pp 32–58). Australia’s purchase of nuclear-powered submarines, along with many other aspects of its defence and foreign relations, is designed to show its relevance to upholding a US-led global order. ‘Deterrence’, not ‘dominance’, is more in line with contemporary public sentiments. Nevertheless, from a military perspective, the idea is not new: put your bases on the edge of enemy territory and patrol as far forward as possible. The military purpose is recognisably MacArthur’s. The public may support the goal of demonstrating Australia’s relevance to the US as it dominates from a distance—but that question has not been put to the public in a meaningful way.
The strategic logic of AUKUS is to demonstrate Australia’s relevance to the US goal of ‘dominance’. That logic is alive and well, and Trump, his tariffs and the resulting turbulence have not altered it one iota.