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America demands Australia double defence spending as China-Tawisan war looms by 2027

Miko Santos

and

Mencari Team

Jun 02, 2025

Transcript

Today is June 3 and here is your Inside Auspol

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The United States has delivered an unprecedented demand to Australia: nearly double defense spending to 3.5% of GDP or risk being unprepared for what intelligence agencies believe could be China's invasion of Taiwan within three years.

The bombshell request came directly from US Defense Secretary Pete Hegseth to Australian Deputy Prime Minister Richard Marles during high-stakes security talks in Singapore, marking the most aggressive American pressure on allied defense spending since the Trump administration's NATO ultimatums.

But Australia's response was swift and defiant: No.

The 2027 Timeline That Changes Everything

The urgency behind America's demand centers on a chilling intelligence assessment that has sent shockwaves through defense circles: China could move militarily against Taiwan as early as 2027 — just two and a half years away.

"When you look at all the preparations that the Chinese are doing in terms of military modernisation, the joint sword exercises that are actually rehearsals for a blockade of Taiwan," warns defense analyst Malcolm Davis, "all of these suggest that the Chinese are deadly serious about imposing unification on Taiwan against the wishes of the Taiwanese people."

For Australians in their 20s and 30s, this timeline carries profound implications. Current university students would be entering their peak career years just as the region potentially erupts into its largest military conflict since World War II. Recent graduates could face expanded military service requirements. The economic disruption could dwarf COVID-19's impact.

Australia's Sovereignty vs. Alliance Pressure

Industry Minister Tim Ayres delivered Australia's response with diplomatic firmness: "We will determine our own defence policy and we will work closely with the United States."

The statement reflects a delicate balancing act between maintaining the crucial US alliance while asserting Australian sovereignty over budget priorities. Currently, Australia spends 2.3% of GDP on defense — already a significant commitment that would need to nearly double to meet American expectations.

The request echoes Trump administration pressure on European NATO allies, where demands escalated from 2% to potentially 5% of GDP. Now that same aggressive approach has reached the Indo-Pacific, with Australia first in the crosshairs.

The Strategic Reality Check

But some experts warn against capitulating to American demands, questioning whether the US commitment to regional defense is as solid as the rhetoric suggests.

Strategic Studies Professor Hugh White delivered a stark assessment: "I think we'd be very unwise to be sucked in by that. His presentation was really quite inconsistent with the general approach we've seen from the Trump administration."

White argues that Trump's foreign policy fundamentally embraces isolationism, with the president preferring to "work with the great powers in a concert of great powers and leave each of these countries to dominate their own backyard."

This perspective suggests America may be demanding allied spending increases while simultaneously preparing to reduce its own regional commitments — leaving Australia potentially overcommitted to defending American interests that America itself may abandon.

The Military Reality: We're Not Ready

The sobering truth about Australia's defense capabilities emerged through Senator Jackie Lambie's blunt assessment: our military is in no condition for major conflict.

"Right now, our troops are not in the condition to be in a war zone," Lambie stated. "20 years we've followed them into the Middle East. We are still picking up the pieces from that."

The numbers tell a stark story:

Defense personnel have declined from 70,000 to 57,000
Recruitment faces significant challenges
Military morale remains damaged from decades of overseas deployments
Equipment and capability gaps persist across all services

"Have you seen the size of the Chinese army?" Lambie asked pointedly. The implication was clear: even with increased spending, Australia's 25 million people cannot match China's 1.4 billion in conventional military terms.

What 3.5% Actually Means

To understand the scale of America's demand, consider what 3.5% of GDP represents:

Current Defense Budget: Approximately $50 billion annually Required Under US Demand: Approximately $85 billion annually Additional Annual Cost: $35 billion — equivalent to the entire Department of Health budget

This massive increase would require either:

Dramatic tax increases
Severe cuts to health, education, and social services
Unprecedented government borrowing
Some combination of all three

For young Australians already facing housing affordability crises, student debt burdens, and stagnant wage growth, the economic implications could fundamentally reshape their financial futures.

The AUKUS Question Mark

Notably absent from Hegseth's Singapore presentation was any mention of AUKUS — the nuclear submarine partnership that represents Australia's largest-ever defense commitment.

This omission raises uncomfortable questions about American commitment to existing agreements. If the Trump administration is lukewarm on AUKUS, Australia could face the worst possible outcome: massive spending on American weapons systems without guaranteed American support in conflict.

The submarine program alone represents hundreds of billions in future spending. Adding Hegseth's 3.5% demand could push total defense expenditure to unprecedented levels.

The Political Calculation

Prime Minister Anthony Albanese faces an impossible political equation. Rejecting American demands risks damaging the alliance relationship at a critical moment. But accepting them requires explaining to voters why defense spending should double while hospitals face capacity crises and housing remains unaffordable.

The opposition Coalition, traditionally more hawkish on defense, finds itself in an awkward position. Supporting American demands validates Labor's rejection of foreign budget dictation. Opposing them risks appearing weak on national security.

Crossbench senators like Lambie appear skeptical: "I just asked Donald Trump to give us our money back for our submarines, mate."

What Comes Next

The immediate test arrives within days when Prime Minister Albanese meets President Trump on the sidelines of international meetings. Defense spending will undoubtedly dominate discussions, alongside trade tensions and alliance commitments.

Trump's approach to allies has proven unpredictable. He could:

Double down on spending demands with economic threats
Offer face-saving compromises that maintain alliance relationships
Reveal broader strategic withdrawals that reshape regional security

For Australia, the stakes couldn't be higher. Get the balance wrong, and the nation risks either dangerous military exposure or economic devastation — potentially both.

The Generational Stakes

This debate transcends immediate politics to fundamental questions about Australia's future. Should the nation bankrupt itself preparing for a war that may never come? Or risk catastrophic unpreparedness if conflict erupts?

For young Australians, these decisions will define the next decade:

Career prospects shaped by massive defense industry expansion
Tax burdens increased to fund military capabilities
Potential military service as regional tensions escalate
Economic opportunities constrained by defense spending priorities

The 2027 timeline means these aren't abstract policy debates — they're immediate planning requirements for life decisions happening now.

The Bottom Line

America's 3.5% demand represents more than budget negotiations — it's a fundamental test of Australian sovereignty, alliance relationships, and strategic judgment in an increasingly dangerous world.

The next few weeks will determine whether Australia charts an independent course based on national interest assessments, or submits to foreign pressure that could reshape the nation's economic and strategic future.

With China potentially preparing for Taiwan invasion and America demanding unprecedented spending commitments, Australia's leaders face decisions that will echo for generations.

The clock is ticking toward 2027. The question remains: will Australia be ready for what's coming, and at what cost?

This story is developing. Updates will be posted as new information becomes available.

Related Coverage:

Analysis: Can Australia afford a 3.5% defense budget?
Explainer: What would Chinese invasion of Taiwan mean for Australia?
Opinion: Why Trump's alliance demands threaten Australian sovereignty
Background: AUKUS submarine deal faces uncertain future under Trump

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