The US National Defence Strategy (NDS), released by the Trump administration on 23 January, demands much more from Australia. It requires greater defence spending and capability development so that Canberra can better support US-led collective defence and deterrence by denial along the first island chain.
In terms of Indo-Pacific security, the NDS makes clear that the United States is not retreating into isolationism but is shifting towards an offshore-balancer role. This approach comes with an expectation that US allies will play a larger role in ensuring collective defence. For Australia’s defence community, this will mean higher US expectations for the Australian Defence Force.
The NDS seeks to build strategic stability with China, promoting deconfliction and de-escalation to build what the document refers to as a ‘decent peace’ that promotes trade and prosperity while ensuring US interests are respected. It argues for enhanced engagement with Beijing towards what looks like peaceful coexistence but is based on peace through strength. The NDS backs up this approach by pursuing a strategy of denial focused on the first island chain, again supported by allies and partners.
The assumption that Washington and Beijing can coexist peacefully is highly questionable. Washington’s pursuit of such a goal would likely see Beijing demand that the Trump administration offer major concessions as a quid pro quo for any reset in the relationship. This would likely include walking away from any commitment to defend Taiwan and potentially other allies. In particular, the absence of any mention of Taiwan in the NDS may see concerns emerge among US allies that, as ASPI senior fellow Euan Graham suggests, ‘…the US is going to increasingly move towards its own version of a stabilisation strategy with China … that may be potentially at odds with the interests of US allies.’
While Taiwan is not mentioned in the NDS, it is mentioned several times in the 2025 National Security Strategy (NSS), on which the NDS is based. Both documents reinforce deterrence by denial with a focus on the first island chain, of which Taiwan lies at the geostrategic centre. The NSS emphasises the importance of collective defence along the first island chain, as a step towards ‘reinforcing US and allies’ capacity to deny any attempt to seize Taiwan’. It is odd that the NDS doesn’t also mention this task. It may be that President Donald Trump doesn’t think that China will move against Taiwan during his administration. Recent high-level purges inside China’s military hierarchy could reinforce this perception. But it’s a high-stakes bet to make, and the cost of getting it wrong would be catastrophic.
The NDS does make clear that one goal is to ‘prevent China from being able to dominate our allies.’ This is consistent with the NDS’s line of effort to increase burden-sharing with US allies and partners in a manner that sees those actors assume primary responsibility for their own defence, with ‘critical but more limited US support’. This has clear implications for South Korea, for example: the NDS says South Korea should take primary responsibility for deterring North Korea and suggests ‘updating US force posture on the Korean Peninsula.’ This could imply a withdrawal of some US forces from the peninsula, which could be announced in the forthcoming Global Posture Review.
Australia isn’t mentioned in the NDS, but the report doesn’t need to call out Australia by name. Australia needs to consider what ‘critical but more limited US support’ could mean for the ADF’s ability to undertake operations. Canberra should be concerned about the Trump administration’s pressure to increase defence investment. The NDS says that:
We will therefore prioritise cooperation and engagements with model allies—those who are spending as they need to and visibly doing more against threats in their regions, with critical but limited US support—including through arms sales, defence industrial collaboration, and other activities that leave our nations better off.
The NDS defines model allies as countries ‘who are spending as they need’. It notes the Trump administration’s pressure on NATO to increase core military spending to 3.5 percent GDP and direct 1.5 percent to security-related expenses, for a total defence expenditure of 5 percent of GDP. The NDS also says that ‘…we will advocate that our allies and partners meet this standard around the world, not just in Europe.’ This is highly significant for Australia.
The debate over the level of Australian defence spending that occurred throughout 2025 is thus likely to be renewed. Australia’s defence spending (as noted in ASPI’s 2025 Cost of Defence report) of 2.05 percent of GDP is set to rise to 2.33 percent of GDP by 2033. But given the clear expectations set in the US NDS, 2.33 percent by 2033—let alone 2.05 percent now—will fall far short of US expectations, even as the Australian government argues that capability and capacity is a more important indicator than the percentage of GDP spent.
The Australian government should expect significant pressure from the Trump administration to do more and invest more. Given the NDS’s approach to deterrence by denial in the first island chain, it is in the interests of the government to meet these requirements. Discussions in 2025 about moving to 3 percent or 3.5 percent of GDP may soon seem outdated, if the US renews pressure on the government to go to 5 percent GDP, and to achieve that goal sooner.
If the government directs additional funding to defence, it should focus on expanding the ADF’s geographic reach well beyond Australia’s air and maritime approaches to our north and west. Australia will still need to operate in the southwest Pacific and northern Indian Ocean, as laid out in the 2023 Defence Strategic Review, but it should prioritise projecting decisive effect and sustained forward presence to the first island chain.
The NDS also reinforces the importance of strengthening defence diplomacy to ensure forward host-nation support with key partners such as the Philippines, Japan and South Korea. Australia is better placed to support a US deterrence by denial strategy along the first island chain if it can operate directly from that region.
But one of Australia’s greatest strengths as an ally is its geography. If we are to contribute to effective collective security, we must focus on ADF resilience, sustainability and readiness, and ensuring Australia is a secure base from which the ADF, and our key allies and partners, can operate. In a practical sense, this should include acquiring effective integrated air and missile defence to protect key facilities in the north and strengthening infrastructure resilience against multi-domain threats, from the surface of the Earth into space and cyberspace.
There are real opportunities to work with the US and other partners to achieve this outcome, and at the same time, help ‘supercharge the US defence industrial base’. Working with the US and other partners to boost military industrial capacity and enhance readiness and sustainability for protracted war will be vital to achieving deterrence by denial and a balance of power across the Indo-Pacific.
Areas where Australia can step up include expanding its shipbuilding capacity, centred around the Henderson facility in Western Australia to support US shipbuilding requirements and sustain Australian and allied warships during conflict. Enabling local production for high technology equipment capabilities, including through AUKUS Pillar Two, would strengthen the defence industrial resilience of US allies and of the US itself.
The US NDS should be a clear signal to Australia’s defence policy community that a steady-as-she-goes approach is no longer enough. Australia must do more, spend more and risk more to work with the US and its allies to reinforce the deterrence by denial that allows hemispheric reach.