Defence

Christopher Salmon

Chief Executive

TLDR

Trade shocks are a constant in global trade, driven by policy, price, and geopolitics. They directly affect margins, supply chains, and market access. Leading cross-border firms respond by building early warning systems, combining policy tracking, data analysis, and horizon scanning, to anticipate disruption and act before it materialises.

Key insights

  • Trade shock exposure varies significantly by supply chain design, market footprint, and regulatory dependency.
  • Policy, price, and geopolitics interact to create faster, more complex disruptions.
  • Early warning systems have become a core capability for protecting margin and market access.

Trade shocks are a defining feature of the modern global economy.

Tariff escalations, export controls, shipping disruption, and commodity price fluctuations are all now recurring realities. Disruption that might once have been considered isolated is now embedded in how global trade operates.

For firms, this changes the commercial equation directly affecting pricing, contracts, delivery timelines, and strategic planning. 

Why this matters

Trade shocks directly shape commercial outcomes, from pricing and contracts to supply chain continuity and market access. Disruption can emerge quickly and from multiple directions. Firms anticipating shocks proactively protect margin and maintain operational control; while those that don’t face cost, delay, and strategic exposure.

Independent, expert trade strategy & horizon scanning →

 

What are trade shocks?

Trade shocks, or sudden changes in the conditions that govern international trade, may originate from policy decisions, price movements, or shifts in global demand – but their defining characteristics are speed and impact.

Practically, trade shocks include:

  • Tariff changes and trade policy interventions
  • Export controls and regulatory restrictions
  • Price shocks in commodities, energy, or industrial inputs
  • Sudden shifts in demand across regions or industries

Shocks like these create fluctuations across the global trading system and have become part of the fabric of a fragmented and strategically competitive global economy. An export price can shift overnight. Goods imports may become more expensive or restricted. Entire supply chains can be reconfigured in response.

Early warning systems for trade shocks: what leading firms do differently

Trade shocks cannot be prevented. But they can be anticipated. At a leadership level, international firms treat early warning systems for trade shocks as a core strategic capability.

Monitor policy and regulatory signals

Trade policy can often signal its direction before it is implemented. Track:

  • Government announcements and trade strategy documents
  • Legislative proposals and consultations
  • Shifts in diplomatic relationships

These signals provide early visibility of potential shocks, particularly in tariffs, sanctions, and export controls.

Track price and demand shifts

Changes in demand and export price dynamics can often precede broader disruption. Commodity markets, trade flows, and macroeconomic indicators can highlight emerging pressure points. 

Organisations lean on (trustworthy) global financial data to identify trends before they translate into price shocks.

Map trade exposure across supply chains

In terms of supply chain exposure, firms assess:

  • Dependency on specific countries or suppliers
  • Exposure to regulated components, materials, or complex goods
  • Vulnerability to trade restrictions or disruptions

This allows them to identify where shocks are most likely to occur, and where contingency planning is required.

Plan scenarios and adjust

Ultimately, preparedness depends on accurate horizon scanning, and sound planning for multiple eventualities. This means modelling:

  • Best-case and worst-case scenarios
  • Policy-driven market access restrictions
  • Supply chain reconfiguration strategies

 

Risk mitigation in international trade

Lessons from the early 2020s and the road to 2030

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Lessons from recent trade shocks in the global economy

  • U.S. IEEPA tariff regime overturned and replaced with Section 122 (February 2026): legal foundations shifted overnight. Duty exposure changed within weeks, forcing firms to reprice contracts and reassess margin assumptions mid-quarter.
  • Steel and aluminium tariffs escalate under U.S. Section 232 expansion (2025-26): input costs rose sharply in the U.S., while excess supply diverted into Europe. The result was a two-speed market and growing compliance pressure around origin rules.
  • Red Sea / Suez disruption (2024-26): shipping routes diverted via the Cape of Good Hope. Freight costs, insurance premiums, and working capital requirements all increased before any formal trade restriction was imposed.
  • Semiconductor export controls (ongoing): trade restrictions extend through supply chains via component-level controls. Firms find themselves subject to foreign policy decisions based on embedded technology.
  • China export rerouting amid tariffs (2025-26): rather than reducing volume, tariffs redirected trade flows into ASEAN, Africa, and Europe. Result: increased import competition and more complex origin and valuation scrutiny.
  • Jaguar Land Rover cyber disruption (2025): production halted across multiple regions. Export schedules and customs compliance processes broke down simultaneously – demonstrating how operational shocks translate directly into trade disruption.

Trade shocks create uneven exposure across firms and regions

Trade shocks do not affect all firms equally. Exposure varies depending on supply chains, markets, territories, and industry structure.

This is how uneven commercial exposure can surface. Some firms operate in relatively insulated environments, while others are deeply embedded in global trade flows – and therefore more vulnerable to disruption.

The same applies at a regional level. Exposed regions (those reliant on specific industries or trade corridors) can experience disproportionate impact when shocks occur.

Regional import exposure and supply chain concentration

Regions with high regional import dependency are particularly sensitive to trade shocks. Where supply chains rely heavily on complex goods imported from a limited number of countries, disruption can cascade quickly. Import competition, regulatory change, or geopolitical risk can all affect availability, pricing, and delivery.

This is especially visible in industries such as:

  • Automotive and advanced manufacturing
  • Aerospace and defence
  • Metals and industrial inputs
  • Electronics and semiconductors

In these sectors – often tied to industrial capacity and sovereign capability – even a single disruption can affect multiple tiers of suppliers, creating system-wide instability.

How trade shocks impact businesses

For multinational firms, the impact of trade shocks can be both immediate and commercial:

  • Margin pressure from rising input costs or tariff exposure
  • Supply chain disruption affecting production and delivery timelines
  • Customs compliance complexity driven by new regulatory procedures
  • Market access constraints limiting export trade opportunities

Exposure can also vary within the same industry. Firms with diversified supply chains and flexible sourcing models are better positioned to absorb shocks, while those reliant on single markets or suppliers face greater risk.

Trade shocks are a permanent feature of global trade. Detect warning signals early to stay ahead

Now a permanent feature of the global trading system, trade shocks reshape pricing, redirect demand, and expose structural weaknesses in supply chains. For firms operating internationally, the challenge is not simply to respond, but to anticipate.

Those that invest in forecasting, governance, and early warning systems will be better positioned to navigate volatility. Those that do not will find themselves reacting to events after the fact.

In modern trade, advantage lies not in avoiding shocks, but in seeing them coming first.

Independent, expert trade strategy and horizon scanning

Speak to our team →

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Defence

What is foreign trade policy? How governments shape global trade, and how to forecast geopolitical shifts

In this article Hide 01 Key insights 02 What is foreign trade policy? 03 Lessons from recent events 04 Trade policy is foreign policy 05 How foreign trade policy regulates international markets – Trade agreements and market access – Trade remedies and defensive measures – Export controls, licensing, and restrictions 06 Why trade policy is becoming less predictable 07 Trade policy forecasting techniques – Political and regulatory signal tracking – Supply chain exposure mapping – Scenario planning and stress testing 08 What this means for exporters and international businesses 09 Final thoughts (function(){ function ready(fn){ if(document.readyState!=='loading') fn(); else document.addEventListener('DOMContentLoaded',fn); } ready(function(){ var toc = document.querySelector('.cb-toc'); if(!toc) return; var headings = [].slice.call(document.querySelectorAll('h2, h3')) .filter(function(h){ return !h.closest('table') && (h.textContent||'').trim().length>0; }); var links = [].slice.call(toc.querySelectorAll('a[data-toc-match]')); var n = 0; links.forEach(function(link){ var needle = (link.getAttribute('data-toc-match')||'').toLowerCase().trim(); if(!needle) return; var match = headings.find(function(h){ return (h.textContent||'').toLowerCase().indexOf(needle)!==-1; }); if(!match) return; if(!match.id){ var base = (match.textContent||'').toLowerCase().replace(/[^a-z0-9]+/g,'-').replace(/^-|-$/g,'').slice(0,48) || 'section'; var id = 'cb-'+base; while(document.getElementById(id)){ id = 'cb-'+base+'-'+(++n); } match.id = id; } match.style.scrollMarginTop = '96px'; link.setAttribute('href','#'+match.id); link.style.cursor = 'pointer'; }); links.forEach(function(link){ if(!link.getAttribute('href')){ var item = link.closest('[role="listitem"]'); if(item) item.remove(); } }); toc.querySelectorAll('a[data-toc-match]').forEach(function(a){ var original = a.style.color; a.addEventListener('mouseenter', function(){ a.style.color = '#c8102e'; }); a.addEventListener('mouseleave', function(){ if(!a.dataset.active) a.style.color = original; }); }); var toggle = toc.querySelector('.cb-toc__toggle'); var list = toc.querySelector('#cb-toc-list'); if(toggle && list){ toggle.addEventListener('click', function(){ var expanded = toggle.getAttribute('aria-expanded')==='true'; toggle.setAttribute('aria-expanded', String(!expanded)); toggle.textContent = expanded ? 'Show' : 'Hide'; list.style.display = expanded ? 'none' : ''; }); } toc.querySelectorAll('a[href^="#"]').forEach(function(link){ link.addEventListener('click', function(e){ var id = link.getAttribute('href').slice(1); var target = document.getElementById(id); if(!target) return; e.preventDefault(); target.scrollIntoView({ behavior:'smooth', block:'start' }); history.pushState(null,'','#'+id); }); }); var targets = [].slice.call(toc.querySelectorAll('a[href^="#"]')) .map(function(a){ return { link:a, target:document.getElementById(a.getAttribute('href').slice(1)) }; }) .filter(function(x){ return x.target; }); if('IntersectionObserver' in window && targets.length){ var map = {}; targets.forEach(function(x){ map[x.target.id] = x.link; }); var current = null; var io = new IntersectionObserver(function(entries){ entries.forEach(function(entry){ if(entry.isIntersecting){ if(current){ current.style.color = '#0b1f33'; current.style.fontWeight = ''; delete current.dataset.active; } var link = map[entry.target.id]; if(link){ link.style.color = '#c8102e'; link.style.fontWeight = '600'; link.dataset.active = '1'; current = link; } } }); }, { rootMargin:'-30% 0px -60% 0px', threshold:0 }); targets.forEach(function(x){ io.observe(x.target); }); } }); })(); TLDR Foreign trade policy is a dynamic instrument of government strategy, shaping market access, supply chains, and commercial risk. For global businesses, a competitive advantage lies in forecasting and horizon scanning, to gain visibility on how policy will shift – and prepare before it does. Key insights Market access and commercial viability are increasingly being shaped by geopolitics – not just “supply and demand”. Policy volatility is rising, driven by international relations, security, defence, and supply chain pressures. Organisations that treat trade policy forecasting as a core strategic capability gain a competitive advantage. For trading nations, exporters, and cross-border businesses, a commercial advantage lies in anticipating how foreign trade policy behaves – and how quickly it might change. It is often presented as a set of tools: tariffs, quotas, agreements and procedures. But in practice, it goes further: shaping economic outcomes, controlling market access, and projecting influence beyond national borders. As the geopolitical environment fragments, foreign trade policy has become more dynamic, more politicised, and less predictable. For organisations operating internationally, that changes the question – from “what is trade policy?” to “how will it move next?” Why this matters Foreign trade policy directly shapes how you operate, compete, and grow across borders. Regulatory shifts alter market access, cost structures, and supply chain viability with little notice. In a more volatile environment, anticipating policy change is critical to protecting margins, maintaining compliance, and securing long-term positioning. Independent, expert trade strategy & horizon scanning → What is foreign trade policy?  Foreign trade policy is the framework set by governments to regulate international trade. It defines how goods, services, and investments move across borders, and under what conditions. It therefore shapes supply chains, influences investment flows, and determines how economic power is exercised. This framework would include: Tariffs and duties applied to imports and exports Trade agreements governing market access Trade remedies such as anti-dumping measures Export controls and licensing procedures In practical terms, foreign trade policy determines: Who can trade What can be traded On what terms → For example, the European Union manages its trade and investment relations with non-EU countries through a structured system of agreements, regulatory alignment, and enforcement mechanisms.  Lessons from recent events… Foreign trade policy operates inside a wider risk environment, where regulatory decisions, geopolitical tension, and supply chain fragility intersect. Commercial resilience depends upon good governance and the ability to adapt. AUKUS and ITAR show that trade policy is closely tied to sovereignty, alliance politics, and operational control. Even where capability is shared, export controls and licensing requirements shape how that technology can be deployed, modified, commercialised, or transferred.  The rapid reconfiguration of U.S. tariff authority – pivoting from one legal basis to another – shows that statutory foundations matter as much as headline rates. Duty exposure can change quickly, even where political objectives remain consistent.  Elsewhere, policy is being rewritten in response to scale and distortion. EU eCommerce customs reform reflects a shift from facilitation to enforcement; at the same time, China’s trade surplus and rerouting patterns show that tariffs don’t always reduce trade flows, but may redirect them, creating fresh origin, valuation, and enforcement risks. Trade policy is foreign policy: how governments use trade as leverage Trade policy is one of the most effective tools of statecraft, and is used to: Reward allies through preferential trade agreements Restrict adversaries through sanctions and export controls Influence global markets  Trade agreements, treaties, and regulatory alignment, therefore, reflect strategic intent. They allow governments to exert pressure, shape behaviour, and protect national interests without direct confrontation. For businesses operating across borders, this means that trade policy is inherently political – and therefore subject to rapid change, uneven enforcement, and strategic deployment. How does foreign trade policy regulate international markets? Trade agreements and market access Trade agreements are central to international trade policy, including: Free trade agreements (FTAs) Bilateral and multilateral treaties WTO frameworks These agreements typically aim to reduce barriers, enable export trade, and create structured access between economies. However, they may also be used to define the limits of access. 1. Trade remedies and defensive measures When governments perceive unfair competition or economic harm, they might deploy trade remedies such as: Anti-dumping duties Countervailing measures Safeguard tariffs 2. Export controls, licensing, and restrictions Governments may also control trade through regulatory procedures, such as: Export licensing requirements Restrictions on sensitive goods or technologies Compliance obligations tied to end-use and end-user These controls are particularly relevant in strategic sectors, like aerospace and defence, where the trade of complex goods may impact national security. Why trade policy is becoming less predictable For decades, international trade policy operated within a relatively stable global system. That stability has eroded. Today, trade policy is increasingly shaped by: Geopolitical fragmentation Strategic competition between major economies Supply chain vulnerabilities Shifts in financial and exchange policies This has led to a more fluid environment, where policy decisions can be introduced, amended, or enforced with limited notice. For example: Export controls can expand to include new technologies Sanctions regimes shift in response to political developments Investment restrictions can be tightened under national security frameworks (such as the National Security and Investment Act, or the US Committee on Foreign Investment). For nations – and for cross-border businesses – this creates a more uncertain, variable operating environment.  Trade policy forecasting techniques: how to anticipate change Beyond static compliance protocols, the boardrooms of leading global firms deploy more dynamic forecasting capabilities. This enables them to identify signals early, assess probabilities, and prepare for commercial impacts.  Political and regulatory signal tracking Policy direction is sometimes visible before it is implemented. Signals include: Government statements and strategic reviews Legislative proposals and regulatory consultations Shifts in diplomatic or trade relationships Trade data and economic indicators Trade flows, investment patterns, and macroeconomic data provide early indicators of policy pressure. Organisations (such as the IMF) publish data that can highlight emerging imbalances or strategic priorities. Changes in export volumes, for example, may precede regulatory intervention. Supply chain exposure mapping Knowing where your dependencies sit is critical. Assess: Reliance on specific countries / suppliers Exposure to regulated components / materials Vulnerability to trade restrictions / disruptions Scenario planning and stress testing Assume global instability will endure. Model disruptive scenarios, such as: Best-case and worst-case trade incidents Policy shifts that affect market access Regulatory changes impacting cost and timelines What this means for exporters and international businesses Exporters and globally active businesses should maintain constant visibility on foreign trade policy, as it is a live variable that directly affects operations. Key implications include: Market access can change rapidly due to policy shifts Customs compliance requirements can increase operational complexity Export restrictions can limit growth opportunities Supply chain disruption can impact delivery and cost Trade law, procedures, and regulations are integral to commercial strategy. Cross-border businesses must navigate not just economic conditions, but policy environments that are increasingly shaped by political and strategic priorities. Final thoughts No longer a static backdrop to international business, foreign trade policy is an active force – reshaping markets, redirecting demand, and redefining risk in real time. For organisations operating across borders, the advantage lies in anticipating: How policy will shift Where exposure sits How quickly it translates into commercial impact The importance lies not in understanding what foreign trade policy is, but in preparing for what it might do next. Independent, expert trade strategy and horizon scanning Speak to our team →

What is foreign trade policy? How governments shape global trade, and how to forecast geopolitical shifts
Defence

Is AUKUS becoming an “America First” franchise?

  Brief Overview AUKUS is entering a more complex phase of its life, where the sovereign capability of Australia and the UK is increasingly determined by the U.S., via ITAR, policy alignment, and regulatory control. For defence leaders, sovereignty may no longer be an absolute idea, but something that is conditional, managed, and operationally constrained. In this article Hide 01 Key highlights 02 The sovereignty paradox 03 The Australian dilemma: more muscle, less agency? 04 The UK perspective – An opportunity in Pillar II? 05 ITAR: “digital leash?” 06 ITAR “snapback” provisions 07 The commercial reality – where sovereignty gets tested 08 Partnership or “America First” franchise? – Sovereignty as a managed condition (function(){ function ready(fn){ if(document.readyState!=='loading') fn(); else document.addEventListener('DOMContentLoaded',fn); } ready(function(){ var toc = document.querySelector('.cb-toc'); if(!toc) return; var headings = [].slice.call(document.querySelectorAll('h2, h3')) .filter(function(h){ return !h.closest('table') && (h.textContent||'').trim().length>0; }); var links = [].slice.call(toc.querySelectorAll('a[data-toc-match]')); var n = 0; links.forEach(function(link){ var needle = (link.getAttribute('data-toc-match')||'').toLowerCase().trim(); if(!needle) return; var match = headings.find(function(h){ return (h.textContent||'').toLowerCase().indexOf(needle)!==-1; }); if(!match) return; if(!match.id){ var base = (match.textContent||'').toLowerCase().replace(/[^a-z0-9]+/g,'-').replace(/^-|-$/g,'').slice(0,48) || 'section'; var id = 'cb-'+base; while(document.getElementById(id)){ id = 'cb-'+base+'-'+(++n); } match.id = id; } match.style.scrollMarginTop = '96px'; link.setAttribute('href','#'+match.id); link.style.cursor = 'pointer'; }); links.forEach(function(link){ if(!link.getAttribute('href')){ var item = link.closest('[role="listitem"]'); if(item) item.remove(); } }); toc.querySelectorAll('a[data-toc-match]').forEach(function(a){ var original = a.style.color; a.addEventListener('mouseenter', function(){ a.style.color = '#c8102e'; }); a.addEventListener('mouseleave', function(){ if(!a.dataset.active) a.style.color = original; }); }); var toggle = toc.querySelector('.cb-toc__toggle'); var list = toc.querySelector('#cb-toc-list'); if(toggle && list){ toggle.addEventListener('click', function(){ var expanded = toggle.getAttribute('aria-expanded')==='true'; toggle.setAttribute('aria-expanded', String(!expanded)); toggle.textContent = expanded ? 'Show' : 'Hide'; list.style.display = expanded ? 'none' : ''; }); } toc.querySelectorAll('a[href^="#"]').forEach(function(link){ link.addEventListener('click', function(e){ var id = link.getAttribute('href').slice(1); var target = document.getElementById(id); if(!target) return; e.preventDefault(); target.scrollIntoView({ behavior:'smooth', block:'start' }); history.pushState(null,'','#'+id); }); }); var targets = [].slice.call(toc.querySelectorAll('a[href^="#"]')) .map(function(a){ return { link:a, target:document.getElementById(a.getAttribute('href').slice(1)) }; }) .filter(function(x){ return x.target; }); if('IntersectionObserver' in window && targets.length){ var map = {}; targets.forEach(function(x){ map[x.target.id] = x.link; }); var current = null; var io = new IntersectionObserver(function(entries){ entries.forEach(function(entry){ if(entry.isIntersecting){ if(current){ current.style.color = '#0b1f33'; current.style.fontWeight = ''; delete current.dataset.active; } var link = map[entry.target.id]; if(link){ link.style.color = '#c8102e'; link.style.fontWeight = '600'; link.dataset.active = '1'; current = link; } } }); }, { rootMargin:'-30% 0px -60% 0px', threshold:0 }); targets.forEach(function(x){ io.observe(x.target); }); } }); })(); Key highlights AUKUS is evolving from an equal partnership into a framework shaped by U.S. regulatory control, particularly ITAR Sovereign capability is increasingly conditional, defined by permissions, compliance, and policy alignment The “sovereignty paradox” remains central: ownership of capability does not guarantee operational control Australia gains significant military strength (for example SSN-AUKUS), but with potential constraints on autonomy The UK faces a split position: limited influence under Pillar I, but stronger opportunity in advanced technologies under Pillar II Pillar II (AI, cyber, autonomous systems) may offer a more flexible route to genuine, exportable sovereignty ITAR acts as a system of embedded, lifecycle control rather than just a regulatory framework “Snapback” provisions introduce uncertainty, making ITAR-light access conditional and reversible Sovereignty is most visibly tested in commercial realities such as supply chains, licensing, and data restrictions Defence leaders must actively manage sovereignty as an operational condition, not assume it as a given The honeymoon phase of AUKUS is officially over.  What began as a bold expression of allied ambition – shared capabilities, industrial integration, and broad strategic alignment – is now bumping into the realities of regulation, sovereignty, and control. In this new “Trump 2.0” era, some tensions have become harder to ignore. Ambitious strategic goals are colliding with the mechanics of export controls, U.S. licensing regimes, and national policy alignment. At the centre of this sits ITAR (International Traffic in Arms Regulations) as the governing force. Tricky questions are emerging: is AUKUS a partnership of equals… or a system of conditional control? Does the U.S. (via ITAR) keep a “digital leash” on Australia and the UK, controlling on how far their sovereign capability can really extend? Why this matters For defence organisations, AUKUS is not just a geopolitical construct. It directly affects how capability is developed, deployed, and monetised. Understanding where control sits, and how quickly it can shift, is critical to managing risk, maintaining market access, and protecting long-term strategic autonomy. Independent, expert trade strategy & horizon scanning → The sovereignty paradox AUKUS promises sovereign capability. In practice, it delivers that capability within a tightly governed framework of shared control. This is the sovereignty paradox with AUKUS.  Defence platforms may be nationally owned. Industrial capacity may be domestically developed. But the ability to deploy, modify, transfer, or export that capability remains embedded in a system of permissions, approvals, and alignment requirements. In other words: Capability does not always equal autonomy Ownership does not always equal control Sovereignty is, sometimes, beholden to the permission of others This is not necessarily a flaw in AUKUS. It may be better-read as a structural feature of how modern defence alliances function… particularly when they are built on asymmetric regulatory regimes. The Australian dilemma: more muscle, less agency? For Australia, a trade-off has come into focus. AUKUS offers Canberra a significant uplift in military capability, most notably through the nuclear-powered attack submarine the SSN-AUKUS (under Pillar I of AUKUS), with initial delivery expected in the early/mid 2030s. This is, in many ways, a “very big stick” in modern defence posture. But that capability comes with (the possibility of) an additional cost. There is also the potential for pressure being applied to Australia, by the U.S., if it ever required military intervention or assistance.  The central question emerging in Australian politics and defence is whether the country is gaining sovereign defence capability, or underwriting a US-aligned security architecture, in which ultimate control sits in Washington. Dependence on US technology, licensing, and approval frameworks introduces constraints such as: Limits on independent deployment decisions Restrictions on modification and integration Reduced flexibility in third-country engagement From a commercial and operational perspective, this creates long-term dependency that is not easily unwound. Australia may be strengthening its military position, but the degree to which it controls that capability is open to debate. The UK perspective The UK finds itself dealing with a different, but not entirely unrelated, tension. On one hand, there is the perception (reinforced by political rhetoric) that the UK risks being relegated to a high-end subcontractor role. Trump’s comments mocking British carriers as “toys,” in the context of US shipbuilding backlogs, contribute to a sense that the UK’s military importance within AUKUS is not considered particularly… important.  On the other hand though, there is a more nuanced and potentially more important development taking place beneath the surface. An opportunity in Pillar II?  While the submarine programme remains tied up in layers of regulatory friction, AUKUS Pillar II (focused on “advanced capability” areas such as AI, cybersecurity, and autonomous systems) tells a different story. Here, the UK is beginning to establish a foothold in areas such as: Autonomous underwater systems Artificial intelligence Advanced sensing and data integration These technologies are fast becoming central to how defence capability is delivered. And crucially, they could offer a slightly different definition of “sovereignty:” one that is harder to describe exclusively with traditional weaponry and military hardware. This is one area where the UK and Australia may be able to innovate – and potentially export – without having to ask permission from Washington. Conventional ideas of sovereignty, in this context, are not entirely absent. But they are uneven. “True sovereignty” might exist under Pillar II of AUKUS, but likely not under Pillar I, and so… can that really be called “true sovereignty”? ITAR: “digital leash?” At the heart of this is ITAR. Often described as a regulatory framework, ITAR might be more accurately understood as a system of embedded control. It governs not just the export of defence articles, but their use, modification, integration, and onward transfer. Once ITAR-controlled components or technologies are introduced into a system, they bring with them a set of obligations that extend throughout the lifecycle of that system. In this way, control is not exercised through overt intervention, but through: Licensing requirements and end-use screening Data restrictions Re-export controls on complex goods Ongoing compliance obligations These mechanisms shape what is (and what isn’t) possible for a component or software long after the initial transfer has taken place. ITAR “snapback” provisions 2026 reforms to ITAR were widely positioned as a breakthrough; an effort to reduce friction within trusted alliances and enable more seamless collaboration. But the introduction of “snapback” provisions complicates that narrative.  ITAR-free or ITAR-light arrangements are not (necessarily) permanent. They can be withdrawn by the U.S., if the Administration feels an ally’s policy position has diverged from its international priorities. In other words: ITAR-free is a privilege. For defence organisations, this introduces layers of uncertainty: Programmes might be built on assumed access and could face disruption Investments may be exposed to policy shifts Long-term planning, inevitably, becomes complicated The commercial reality – where sovereignty gets tested For all the geopolitical framing, the real impact of these dynamics is felt at operational levels. This is an often-overlooked frontline of sovereignty, which gets tested in: Supply chain design Licensing timelines Subcontractor selection Cross-border data flows Delays in approval processes can affect delivery schedules. Restrictions on technology transfer can limit collaboration. Customs compliance requirements can reshape how organisations structure their operations. Sovereignty, then, is not only determined in policy papers and machines of war, but also in commercial execution. Partnership or “America First” franchise? Which brings us back to the central question: has AUKUS become an “America First” franchise? AUKUS remains an important alliance strategically, built on shared interests and mutual benefit. But it also operates within a framework in which control and autonomy are not always evenly distributed. The United States, through ITAR and related mechanisms, retains significant influence over how capability is developed, deployed, and transferred. This does not necessarily negate the value of the partnership. But it does redefine it. Sovereignty as a managed condition For Australia and the UK, the idea of sovereign capability under AUKUS is not a fiction. But it isn’t absolute, either.  It is… conditional. Structured. Governed. Increasingly, it must be understood as something that is managed – through compliance, alignment, and operational discipline – rather than simply “owned outright”. And, for defence leaders, the challenge is scanning the horizon for early signals of exactly how new expressions of sovereignty might be exercised in practice. And, ultimately, who owns the terms under which they can be exercised. Borders For the Boardroom  the clearBorder podcast Listen now on Spotify →  Listen now on Apple → 

Is AUKUS becoming an “America First” franchise?
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