When Elbridge Colby, the combative former Trump Pentagon official and lead architect of the U.S. National Defense Strategy under the previous Republican administration, resurfaced in headlines this week, few in Canberra could afford to ignore him. Reports from the Financial Times confirm that Colby, now a key figure in the Trump-aligned faction overseeing a review of the AUKUS submarine deal, has been actively pressing Australia and Japan to clarify their willingness to commit troops in the event of a U.S.-China war over Taiwan.
This marks a sobering inflection point for Australian foreign policy. Colby’s message is blunt: the era of strategic ambiguity is over. If Australia wants the benefits of access to U.S. nuclear-powered submarines under AUKUS, then it must be prepared to show its cards. To publicly declare it would fight alongside the U.S. against China, potentially in a regional war of devastating scale.
For Australia, this is more than a diplomatic nuisance. It is a trap set between its most important security partner and its largest trading partner. Nearly one-third of Australian exports (worth over $180 billion annually) flow to China, from iron ore and coal to wine, seafood, and education services. China remains the nation’s most consequential economic relationship. And while trade relations have recently thawed after years of political frost, Canberra knows from painful experience that Beijing can weaponize trade at will, punishing perceived diplomatic slights with tariffs, bans, and restrictions.
Any overt commitment to join a U.S.-led conflict over Taiwan risks jeopardising this economic lifeline. But equivocation risks the ire of Washington, especially under a future Trump administration that demands not just rhetorical loyalty, but tangible military commitments.
It’s an increasingly untenable tightrope, and Elbridge Colby is shaking the wire.
Strategic Submarines or Strategic Surrender?
The former Director-General of the Department of Foreign Affairs and Trade (DFAT), Peter Varghese, has argued that if Australia’s political leadership cannot find the resolve to exit the AUKUS arrangement itself, then perhaps America might “save us from ourselves.” In a recent commentary, Varghese suggested that Colby’s hard-line conditionality could offer a face-saving off-ramp for Australia: if the U.S. adds provisions to the submarine deal that no Australian government could accept without irreparably compromising national sovereignty or economic stability.
His argument is rooted in both realism and history. “The salad days of Australian foreign policy are over,” Varghese wrote, observing that Australia has long benefited from a strategic sweet spot: security through a U.S. alliance, prosperity through trade with China. But in an increasingly bipolar world, “we can no longer have our cake and eat it.”
Framed by Colby’s pressure and Trump’s looming return, this moment forces Australia to answer questions it has long postponed: Is it capable of defending itself without subcontracting its sovereignty to Washington? And what role, if any, should it play in constraining China's regional ambitions?
The answers will determine the future not just of AUKUS, but of Australia’s strategic identity.
AUKUS: From Alliance Asset to Albatross?
Colby’s review comes amid growing unease over the feasibility and coherence of AUKUS itself. As reported by multiple sources including The Australian Strategic Policy Institute, the U.S. Navy has voiced concern that delivering even three second-hand Virginia-class submarines to Australia by 2032 could further strain its own overextended fleet. Meanwhile, Britain’s promised “SSN-AUKUS” submarines, designed by BAE Systems and powered by Rolls-Royce PWR-3 reactors, are plagued by severe industrial bottlenecks, ballooning costs, and production delays.
In Australia, BAE’s performance record is no less concerning. The Hunter-class frigate project, another multi-billion-dollar contract awarded to BAE, has become a case study in procurement failure, beset by design flaws, soaring costs, and delays so severe that even senior defence hawks now question its viability. These are the same shipyards slated to build Australia’s AUKUS submarines, whose delivery timeline already stretches into the 2040s (optimistically).
The well over $368 billion projected cost would consume a massive portion of future defence budgets, even as other urgent priorities like cyber, drones, and missile systems remain underfunded.
Critics like former defence official Hugh White warn that Australia is shackling itself to a speculative capability it may never receive, in exchange for strategic dependency on an increasingly mercurial America.
What Sovereignty Looks Like Now
Colby’s demand is clarifying. By asking Australia to commit to war in Taiwan now, as a precondition for receiving submarines decades from now, he forces the Albanese government to confront the cost of strategic subservience.
But the deeper question remains: Can Australia embrace a credible strategy of defence self-reliance while maintaining a cooperative - but not dependent - relationship with the United States?
The answer will require more than hedging. It will demand new investments in sovereign defence industry capacity, smarter regional diplomacy, and a foreign policy that strengthens ties with partners like India, Indonesia, and Japan without surrendering leverage to either Washington or Beijing.
Australia's dilemma is real. But so is its agency. As Peter Varghese notes, “Our security will only be found through defence self-reliance... buttressed by the technology, intelligence and deterrent value of an alliance with the United States.” That’s not the same as joining every American war.
Colby may wish to draw new red lines in Indo-Pacific sand. But Australia would do well to recall: lines drawn hastily, especially under pressure, often turn into traps.
Australia’s entangled economic relationship with China adds a critical layer of complexity to any decision about military alignment in a Taiwan conflict. China remains Australia’s largest trading partner by a wide margin, accounting for roughly one-third of all exports, including iron ore, critical minerals, LNG, and agricultural products. In 2024 alone, bilateral trade surged past A$325 billion, a rebound from the post-2020 diplomatic chill sparked by Australia’s call for a COVID-19 origins investigation.
This deep economic interdependence renders Canberra’s strategic calculus particularly fraught. Acceding to Elbridge Colby’s push for a public pre-commitment of troops in the event of a conflict over Taiwan could trigger significant retaliation from Beijing - ranging from targeted trade sanctions to coercive restrictions on critical exports. Australia has already experienced Beijing’s willingness to wield trade as a weapon of political pressure, with wine, barley, coal, and lobster industries previously suffering under sudden Chinese import bans. To risk that leverage again, this time over an explicit military pledge, could devastate key sectors of the Australian economy, especially in regional communities.
Indeed, this economic sword of Damocles has reinforced Canberra’s long-standing strategic ambiguity. As Rory Medcalf of the ANU’s National Security College has noted, “Australia is walking a tightrope - seeking deterrence and resilience through AUKUS, while keeping trade open with its largest economic partner.” It is this duality - a security alliance increasingly defined by U.S. expectations and a trading dependency bound to Chinese goodwill - that explains why pre-commitment to a Taiwan conflict remains politically radioactive in Australia. In effect, economic sovereignty and strategic autonomy are now co-dependent and the Colby doctrine risks destabilising both.
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