Defense Trade/Arms Exports Highlights – 2025 Year in Review, Indo-Pacific

2025 saw many Indo-Pacific nations sharply increase defense spending and military sales in response to rising tensions. Regional governments focused on expanding deterrence and maritime security through procurement of naval platforms, advanced strike capabilities, and expanding defense production partnerships.

AUKUS

Trump Secretary of State Pick Rubio Voices ‘Strong’ Support for AUKUS ‒ In January, President Trump’s nominee for secretary of state, Marco Rubio, emphasized the administration’s support for the AUKUS agreement. During his confirmation hearing before the Senate Foreign Relations Committee, he said the alliance is “a blueprint in many ways of how we can create consortium-like partnerships with nation-states that are allied to us to confront some of these global challenges.”

Pentagon to Review U.S. Role in AUKUS Submarine Pact – On June 10, the Pentagon announced it will conduct a reassessment of the U.S. role in the AUKUS agreement. U.S. officials and lawmakers raised concerns over canceling the agreement to develop and sell nuclear-powered submarines to Australia, citing potential damages to U.S. credibility. However, President Trump, Secretary of Defense Hegseth and Secretary of State Rubio all made statements supporting the alliance following the announcement of the review.

Trump Affirms Support for Nuclear Sub Deal ‒ President Trump confirmed the United States will move “full steam ahead” with the AUKUS nuclear submarine pact with Australia and the United Kingdom  during a meeting with Australian Prime Minister Anthony Albanese. Trump and Albanese also signed an AUD $8.5 billion agreement to jointly invest in critical minerals and rare-earth supply chains, aiming to reduce reliance on China amid growing trade tensions.

Leonardo DRS, Hofmann Team Up on Next-Gen Naval Propulsion for AUKUS ‒ U.S. naval firm Hoffman Engineering and Leonardo DRS have signed an agreement to jointly develop next-generation naval electric, hybrid and steam-powered submarine propulsion systems to support AUKUS defense cooperation.

Hegseth, Counterparts Praise AUKUS ‘Commitment’ after Pentagon Review ‒ U.S., United Kingdom and Australian defense leaders met to reaffirm strong support for the AUKUS security pact following the Pentagon’s review of the agreement. The meeting highlighted the nations’ renewed commitment and emphasized their determination to advance submarine sales and construction under AUKUS Pillar I amid broader defense collaboration.

Taiwan

U.S. Greenlights Massive, $11 Billion Military Arms Package to Taiwan ‒ The United States approved its largest arms package to Taiwan. The $11 billion deal covers multiple defense systems including HIMARS rocket launchers, howitzers, drones, missiles and other equipment.

Japan

Japan Increases Defense Budget – Japan approved a record defense budget, up 9.4% from last year to the equivalent of $55.1 billion. This is the 13th year in a row Japan has increased its military budget.

Japan’s $60 Billion Defense Budget Request Seeks Funding for a Coastal Defense Network, More F-35s ‒ Japan’s Ministry of Defense has submitted a $59.9 billion budget request for FY26, highlighting its push to develop SHIELD, a multilayered littoral defense system comprised of unmanned systems. The budget also includes such acquisitions as additional F-35 fighter jets and KC-46A tankers.

Japan Delivers First Domestically Produced Patriot Interceptors to U.S. ‒ Japan has completed its first delivery of domestically produced Patriot Advanced Capability-3 (PAC-3) interceptors to the United States, drawn from Japan’s Air Self Defense Force inventory. The missiles were sent at Washington’s request to help replenish stocks of Patriot missiles depleted following transfers from U.S. reserves to Ukraine.

Singapore

Singapore Expands Defense Spending for Naval Modernization – Singapore has announced a 12.3% increase to its defense budget, pushing overall spending to S$23.4 billion ($17.4 billion) in the new fiscal year. The spending is intended to support the construction of two new Multi-Role Combat Vessels and two new offshore patrol vessels, which will enter service in 2028. Singapore also plans to use the funds to purchase six MRCVs and two Type 218SG diesel-electric submarines.

South Korea

South Korea puts brakes on follow-on Apache acquisition: Reports ‒ South Korea has elected to explore alternatives, including unmanned systems, to its purchase of 36 Boeing AH-64E Apache attack helicopters and reduced its budget for the program from $7.29 million to $216,000 USD.

Trump: U.S. to Share Nuclear Sub Tech with South Korea, Build Boats in Philly ‒ Trump announced the United States will share nuclear submarine propulsion technology with South Korea, allowing Seoul to build its own nuclear-powered submarines at the Hanwha-owned Philly Shipyard in Philadelphia.

Hanwha to Invest $5 Billion to Improve Infrastructure at Philadelphia Shipyard ‒ South Korea’s Hanwha Group has announced a $5 billion investment to expand the Hanwha Philly Shipyard in Philadelphia, aiming to increase ship production capacity from fewer than two vessels annually to up to 20. The investment is part of a broader $150 billion South Korea–U.S. shipbuilding partnership and will support construction of LNG carriers, naval vessels and Jones Act-compliant tankers.

Indonesia

UK, Indonesia Agree to $5.2 Billion Maritime Partnership, Boost Indo-Pacific Security ‒ Indonesia has reached an agreement with the United Kingdom to launch a $5.2 billion Maritime Partnership Program (MPP), led by British defense firm Babcock, which will see Indonesian shipyards build naval and fishing vessels with the help of British expertise.