President Trump ousted Navy Secretary John Phelan on Wednesday after months of friction over the pace and direction of the administration's ambitious naval expansion, making Phelan the first military service secretary removed during Trump's second term. The move, reported by The Hill, came just one day after Phelan publicly floated the idea of building American warships in foreign shipyards, a position that collided with the president's drive to rebuild the fleet on American soil.
Retired Navy Captain Hung Cao, a decorated combat veteran who spent more than two decades in uniform with deployments to Somalia, Afghanistan, and Iraq, will serve as acting secretary. The Senate narrowly confirmed Cao as under secretary of the Navy last October.
The shakeup signals that Trump means what he says about shipbuilding. And it sends a clear message to every defense official in the building: the president's "Golden Fleet" agenda is not a talking point. It is a directive.
The timeline tells the story. In late December, Trump announced a new class of battleships as part of the Navy's "Golden Fleet," with a target date of 2028 for the first hull. Phelan, a billionaire who donated close to $1 million to Trump's fundraising committee during the 2024 election, had been in the job for 13 months. He canceled the troubled Constellation-class frigate program and pivoted to the Navy's Future Frigate, the FF(X), derived from the Coast Guard's Legend-class cutter.
Then came Tuesday. At the Sea-Air-Space 2026 conference, Phelan told reporters he would be open to building U.S. warships outside the country. "Everything's on the table," he said. "We just need to look at it, understand it, understand the implications behind it and decide if we think that makes sense or not."
By Wednesday, he was gone.
CNN reported that Phelan was asked to resign following a meeting between Defense Secretary Pete Hegseth and Trump focused on shipbuilding. Fox News reported that tensions between Hegseth and Phelan had been building for months, with multiple sources describing concerns about Phelan's execution of major shipbuilding programs and frustration that he sometimes bypassed Hegseth to take issues directly to the president. A senior administration official told Fox News that Trump and Hegseth agreed new leadership at the Navy was needed.
Pentagon spokesman Sean Parnell confirmed Phelan was "departing the administration, effective immediately," as Breitbart reported, with no further explanation offered publicly.
Speaking to reporters at the White House on Thursday, Trump offered warm words for Phelan while making clear the departure was about results. He described Phelan's job performance as "very good" but said the former secretary had run into friction with others in the defense establishment over fleet expansion.
"He had some conflicts with some other people, mostly as to building and buying new ships. I'm very aggressive in the new shipbuilding, and somehow he just didn't get along with them. He's an excellent guy. I think he would have gotten along great with me. I didn't really deal with him too much."
Trump added a pointed observation about the demands of military leadership:
"I consider him to have done a very good job. I put out a nice statement about him. Got to get along, especially in the military. You got to get along and some people liked him, some people didn't, and that's usually the truth about everything."
Earlier Thursday, Trump posted on Truth Social that Phelan could rejoin the administration "sometime in the future." The Washington Times noted that Trump framed the departure as voluntary, writing that Phelan "has decided to move on," even as multiple accounts tied the ouster to clashes with Hegseth and slow progress on the fleet.
When asked directly whether Phelan was fired, Trump said "not necessarily." The gap between that diplomatic framing and the speed of the exit speaks for itself.
The Navy's budget request tells you how high the stakes are. The service asked for $377 billion for next year, with more than $65.8 billion earmarked for shipbuilding alone, enough to procure 18 warships, including destroyers and submarines. Trump's "Golden Fleet" vision, announced in late December, added a new class of battleships to that already strained pipeline.
Not everyone in the defense community thinks the battleship concept is sound. Retired Navy Rear Adm. Mark Montgomery, now senior director for the Foundation for Defense of Democracies, told reporters Thursday he was not "disappointed" with Phelan's ouster. But he offered sharp criticism of the battleship plan itself.
"He and the president cooked up an extremely bad idea, which is a very large target known as a battleship. That's going to cost $24 to $26 billion minimum. For the first one, which is the cost of like, 12 destroyers."
Montgomery also took aim at Phelan's frigate replacement. He said the FF(X), derived from the Coast Guard cutter, "was the exact opposite of the requirements the Navy would have given him for frigate," noting it had "no AS undersea warfare system, no air defense system, no vertical launch system and is extremely noisy."
The question of where to build ships, domestically or abroad, added another fault line. Phelan's openness to foreign shipyards put him at odds with the administration's emphasis on American manufacturing. Montgomery, for his part, encouraged a middle path: cooperation with Japan and South Korea, where allied yards would build the first ships while training and investing in U.S. facilities for follow-on production.
The broader pattern of Pentagon leadership reshuffling under Hegseth has drawn attention from lawmakers and defense analysts alike. More than 30 senior military officers have been ousted under the defense secretary. Hegseth also fired Phelan's chief of staff, John Harrison, back in October, a move that signaled trouble well before Wednesday's removal.
White House spokesperson Olivia Wales told The Hill on Thursday that Cao was ready for the job:
"Hung Cao is eminently qualified to serve as the Acting Secretary of the Navy, working with President Trump to restore America's maritime dominance and continue strengthening the most elite naval force in the world."
Cao's biography backs up the claim. A U.S. Naval Academy graduate, he served more than two decades in the Navy before retiring as a captain. He previously ran unsuccessfully for House and Senate seats in Virginia. His confirmation as under secretary was narrow, but he is now positioned to oversee the most consequential naval buildup in a generation.
Wales added that Cao "is a decorated combat veteran who embodies the American dream, loves our country, and will do an excellent job leading our great United States Navy." The framing is deliberate: Cao is a warfighter, not a fundraiser.
The contrast with Phelan, a billionaire donor with no military service record mentioned in any reporting, is hard to miss. AP News described Cao as a "Trump-aligned former Navy officer" and noted the broader pattern of Trump and Hegseth reshuffling top Pentagon leadership.
Retired Navy Capt. Kevin Eyer framed the underlying tension bluntly, asking whether efforts to create more shipbuilding jobs were conflicting with actual military needs. "The Navy needs a leaner, mission-focused small surface combatant that multiplies force through clarity of purpose rather than gold-plated excess," he said.
That tension, between political ambition and operational reality, has dogged American shipbuilding for decades. The domestic industrial base has shrunk. Timelines slip. Costs balloon. The Constellation-class frigate, which Phelan canceled, was itself years behind schedule before he arrived.
The ongoing turbulence at the Pentagon under Hegseth's leadership has raised questions about stability at the top of the defense establishment. But the administration's defenders argue that shaking up entrenched bureaucracies is exactly what voters elected Trump to do.
Hunter Stires, a maritime strategist who served under both Biden and Trump, said Phelan made a fatal mistake by appearing open to outsourcing warship production overseas:
"President Trump said it himself today that 'I'm very aggressive in the new shipbuilding.' I have every expectation that senior leaders across the Navy and the administration at large will see the clear signal sent by President Trump's ouster of Secretary Phelan this week: that even appearing to advocate for outsourcing U.S. naval construction overseas in any way that disincentivizes or slows the pace of transformative shipbuilding investments here at home is a career-ending opportunity."
That word, "career-ending", is the one every appointee in the building should circle. Personnel controversies inside the Defense Department have become a recurring feature of this administration, and the Phelan episode will not be the last.
The Washington Examiner reported that friction between Phelan and Hegseth grew in part because Phelan had direct access to Trump and would sometimes take matters to the president personally, a dynamic that grated on the defense secretary. That kind of end-run may work in business. In a military chain of command, it is a fast way to lose your job.
Sen. Jack Reed called Phelan's removal "troubling," saying the disruption comes at a sensitive moment for U.S. naval forces. But disruption is sometimes the cost of demanding results from an institution that has spent decades delivering excuses instead of ships.
The Navy's shipbuilding crisis did not begin with Phelan, and it will not end with his departure. Former Biden-era Navy Secretary Carlos Del Toro had his own initiative, a framework called "maritime statecraft", that explored cooperation with allied nations on ship construction. The problem has outlasted multiple administrations. What has changed is the willingness at the top to make hard calls about Pentagon priorities and remove people who cannot or will not execute.
Trump wants ships built in America, built fast, and built under leaders who share that urgency. Phelan suggested looking overseas. Now he is looking for his next job.