The US government is believed to be allocating $4 billion for the missile manufacturing.
It is being driven by the war in Ukraine highlighting a troubling lack of ammunition stocks in Western nations including the US.
Economic security program director at US Studies Centre Hayley Channer told Weekend Today the US would licence the intellectual property but it would be manufactured in Australia.
"This is a really big development but it kind of continues the trajectory of us needing to work together more because of things like what's happening in Ukraine," Channer said.
Officials from both countries are downplaying concerns the AUKUS pact could be derailed in the US Congress, after 23 Senate Republicans said they would not support the proposal.
Channer said she was really hoping to see progress and all three countries could make AUKUS a reality.
She admitted the missile production had a lot to do with China's rise in the Pacific.
"If China wasn't doing what it was doing in the South China Sea, if it wasn't intercepting ships in the dangerous way that it was and if it wasn't also doing things in the economic space to coerce Australia... we wouldn't be so concerned about China's rise.
"But because China is investing extremely heavily in its military... We are really concerned about China changing the status quo and destabilising what has been a stable region for decades."
She said China now had a military larger than the US.
More information will be announced during the AUSMIN talks today.
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