Neither tariff-driven cost blowouts nor the influence of controversial billionaire Elon Musk will blow up Australia’s nuclear submarine deal, Prime Minister Anthony Albanese has vowed.

It comes amid reports that a US lawmaker on a Senate armed services sub-committee has said more than a third of the steel and aluminium that went into ships and submarines came from partners, including the UK and Canada.

Both countries have been whacked by tariffs imposed by US President Donald Trump, giving rise to worries the cost of nuclear-powered submarines promised to Australia under the trilateral AUKUS agreement could skyrocket.

Australian shares resumed their downward slide on Friday, after the White House confirmed it was drastically hiking tariffs on Chinese imports, fuelling global recession fears.

The slip on Friday came after a broad-based sell-off on Wall Street overnight, after the S&P500 fell 3.46 per cent, the tech-led Nasdaq lost 4.31 per cent and the Dow Jones Industrial index shed 2.50 per cent.

“The roller-coaster ride for Wall Street this week continued as US stocks reversed a chunk of Wednesday’s relief rally on concerns over escalating trade tensions between the US and China and recession,” IG Markets analyst Tony Sycamore said.

In a further worrying sign, bond yields again shot up overnight, indicating further discomfort and dislocation in debt markets and falling confidence in US treasuries.

Markets had rallied a day earlier, when Trump announced a 90-day delay for the bulk of his “liberation day” tariffs while escalating taxes on Chinese imports to 125 per cent.

The White House later clarified the effective tariff on Chinese goods was 145 per cent, including an earlier 20 per cent impost the US linked to China’s purported role in the fentanyl trade, sending markets reeling.

Musk’s AUKUS focus

In more ominous signs for AUKUS, Musk, who heads Trump’s cost-cutting US Department of Government Efficiency, has also been tasked with reviewing and helping to streamline the vessel procurement process.

But Albanese has brushed off concerns, noting he had spoken with former US president Joe Biden and members of the Congress and Senate during his last state visit.

“I’m confident about AUKUS,” he said in Darwin on Friday,

“I’m also confident that people, when they make an assessment, know that this is in Australia’s national interest, but it’s also in the national interest of the United States.

“We support the existing arrangements that we have with the United States.”

Australian Strategic Policy Institute senior analyst Euan Graham said while the US-Australia military alliance was getting closer, there was more doubt and uncertainty politically.

“What it requires is a hard swallow in Canberra and a willingness to double down,” he said.

“I don’t just mean on AUKUS, but what the Australian Defence Force needs urgently is to get as much combat capability into service as soon as possible, given the security headwinds that we face globally and in the region.”

Graham said the “common complaint” of Australia relying on the US for its security, was down to inadequate defence spending.

“Australia has had a relatively easy, cheap ride on defence and that ride may be coming to a natural end now,” he said.

“Not because it’s been broken by American political dysfunction, but because we’re in in a pre-war situation in this region.”

Defence spending is about 2 per cent, and is set to be boosted to just over 2.3 per cent by the end of the decade.

Under AUKUS, Australia is meant to acquire three Virginia-class submarines from the US in the early 2030s, before a new fleet of boats is built for delivery from the 2040s.

But the US’s sub production is lagging, and the American president can sink the deal if their own navy’s capabilities are at risk.

Trump has since announced a 90-day pause on tariffs above 10 per cent for most nations, apart from Canada, Mexico, and China.

-with AAP