Donald Trump and AUKUS challenges: Andrew Hastie says US President will press Australia on defence spending

The opposition’s defence spokesman Andrew Hastie has warned of significant risks and looming challenges to AUKUS under US President Donald Trump and said it is inevitable the US will demand Australia lift its defence spending.

Mr Hastie said the threats to Australia had grown and that the military needed to be able to “give a punch” and “able to take a punch in this dangerous world.”

Speaking to the Australian Defence Magazine Congress in Canberra, Mr Hastie was pressed on the Coalition’s spending commitments to defence with the federal election due by May.

“We’ve got to work out what our strategy is first, what are we trying to achieve, and then resource it accordingly,” he said.

“But I think the baseline of two per cent is too low, and it’s clear that the US administration is asking European allies to go up to five per cent.

“It’s just a matter of time before we get pushed publicly on our GDP again.”

Australia’s defence spending is set to rise to 2.3 per cent of GDP by 2033-34, which the Albanese Labor Government says is 0.2 per cent higher than the goal set by the Coalition when it was in government.

The re-election of Donald Trump and his attempts to negotiate an end to the Russia-Ukraine war directly with President Vladimir Putin, possibly bypassing Ukraine’s President Volodymyr Zelensky has alarmed European leaders.

Some have scrambled to find new defence spending, including Denmark which this week said it would raise spending to 3 per cent of GDP.

One of Australia’s AUKUS partners, the UK, is set to announce an increase to 2.5 per cent, possibly when Prime Minister Keir Starmer visits Mr Trump next week.

Former British defence secretary Grant Shapps recently told The Nightly that Australia’s defence spending was too low given the threats the Indo-Pacific faces from an increasingly aggressive China and that it partly justified the US President’s savage treatment of allies.

Mr Trump has not personally ever endorsed AUKUS – the plan to deliver Australia nuclear-propelled submarines via the United States from next decade – but his Defence Secretary Pete Hegseth has said that he is in favour and that the administration hoped the subs would be delivered in time.

As part of AUKUS, the US, Australia and the UK additionally struck a giant free trade agreement that would allow them to sell each other defence weapons and systems that the US previously did not allow to be exported.

But Mr Hastie said there were “significant risks” that Mr Trump’s protectionist trade policies could shortchange Australian defence manufacturers.

“The risk is that President Trump makes it even tougher for Australian small and medium enterprises, who already struggle against defence’s institutional preference for foreign military sales.

“The risk is that US primes with a business presence here in Australia, move with the prevailing winds and do more of their work in the United States, that the Trump administration demands more defence industry to be done in the US as part of his reassuring strategy.”

But he said there were opportunities if Australia approached the Trump Administration rationally and proposed bilateral economic and security deals in sectors such as critical minerals used to make next-generation technology components such as semiconductors.

“This would allow the US to protect selective industries, say, microchips, but retain a supply of essential inputs like silica,” Mr Hastie said, noting that Australia was the second-largest exporter of silica in the world.

“Australia would be well positioned to capitalise here with the US, with our strong commodities markets, rare earths and critical minerals.

“Think of the opportunity for Australian Defence businesses if we were, if we’re able to strike a good deal with the Trump Administration.”

Mr Trump is still considering whether to exempt Australia from a 25 per cent tariff on steel. But his adviser on the subject, Peter Navarro, has accused Australia of being a third-party exporter on behalf of China and allowing Chinese steel into the US.

Former Home Affairs Secretary Mike Pezzullo, who authored Australia’s 2009 Defence White Paper, said Australia could swerve the Trump tariffs by doing two things.

“We should commit to two things: one to ensure that no steel or aluminium is the subject of unreasonable levels of subsided support,” he said.

“And we should sign a strategic steel and aluminium partnership agreement in the areas of defence and national security - in other words we become part of the US defence industrial base.”

The former Coalition government secured an exemption during Mr Trump’s first term.

Justin Bassi, executive director of the Australian Strategic Policy Institute, said that one way of securing a second reprieve would be to default ban Chinese equipment from supplying Australia’s critical sectors.

“Of the multiple factors that helped Australia get the full exemption during the first Trump term, our China policy was the most significant,” said Mr Bassi, who served as chief of staff to former foreign minister Marise Payne.

“Part of that was to show the US that we would not allow transhipment or have such a weak security framework that China controlled our critical infrastructure - so being the first country to ban China’s suppliers of concern from our 5G telecommunications network and strengthening our foreign investment regime.

“One important measure we can take that would protect Australia while also assuaging Trump Administration concerns about Chinese abuse of global supply chains is to create a national public framework that by default — rather than not responsive review — prohibits suppliers of concern from our critical infrastructure.

“That’s vital for our national security and would again be a strength in the alliance partnership.”

Defence Minister Richard Marles was contacted for comment.