In one of the most consequential Pentagon shakeups of President Trump’s second term, Defense Secretary Pete Hegseth, on April 22, 2026, fired Navy Secretary John Phelan, abruptly ending a turbulent tenure marked by clashes with Pentagon leadership, a stalled shipbuilding agenda, and questions about an ethics probe. Under Secretary Hung Cao, a retired Navy captain and 25-year combat veteran, will immediately assume the role of acting Navy Secretary as the United States maintains a high-stakes naval blockade of Iranian ports near the Strait of Hormuz.
The dismissal, announced by chief Pentagon spokesman Sean Parnell in a post on X on the evening of April 22, caps months of internal friction that senior administration officials say had become untenable as the Navy confronts its most serious operational challenge in a generation. Trump, who had personally championed Phelan’s nomination in late 2024, told aides he agreed with Hegseth that new leadership at the Navy was needed. The president later praised Phelan on Truth Social as “a long time friend” and suggested he would welcome him back to the administration in the future. Speaking in the Oval Office the following day, Trump added that Phelan “had some conflicts with some other people, mostly as to building and buying new ships,” saying, “I’m very aggressive in the new shipbuilding.”
A relationship that unraveled fast
According to multiple officials familiar with the matter, Phelan’s relationship with Hegseth had deteriorated sharply since late 2025, when disagreements over fleet readiness, shipbuilding reform, and the pace of industrial-base modernization spilled into open confrontation. Hegseth was also irked by Phelan’s direct communication with Trump, which the defense secretary viewed as an attempt to bypass the chain of command. Phelan, a financier who co-founded MSD Capital and chaired Rugger Management, had no prior military service — and was seen by Hegseth’s inner circle as resistant to the warfighter-first culture the Pentagon chief has tried to impose.
The friction extended to Deputy Secretary of Defense Steve Feinberg, the co-founder of Cerberus Capital Management, who pushed to take control of major responsibilities for shipbuilding and Navy acquisitions — a job that would typically fall within the Navy secretary’s purview. Phelan had also promoted the Trump-class battleship concept, which Hegseth saw as a distraction from his strategy of smaller, uncrewed ships, further deepening the rift between the two men.
The break came during a White House meeting on April 22 between Trump and Hegseth on shipbuilding. Trump, frustrated by slow progress, became convinced during the meeting that Phelan needed to go, and he and his defense secretary resolved to install someone who would move faster. Hegseth then informed Phelan he needed to resign or be fired.
Shipbuilding reforms fall behind
Central to Phelan’s ouster was the administration’s frustration with the pace of shipbuilding reform. The White House has grown increasingly impatient with delays across submarine and surface combatant programs, including Virginia-class attack submarines, the new FF(X) frigate, and the Columbia-class ballistic missile submarine program. Cost overruns and workforce shortages at major yards have pushed several programs behind schedule.
Just one day before his firing, Phelan delivered a keynote address at the Sea-Air-Space 2026 exposition and told reporters, “We’re going to really need to improve our ability to build ships.” He also oversaw the release of the Navy’s fiscal 2027 budget request — a $377.5 billion proposal that includes $65.8 billion for shipbuilding — nearly two and a half times the $27.2 billion allocated in FY26 — plus initial funding for the Trump-class battleship. But insiders say his reform efforts were too slow for a White House that wanted immediate sweeping changes yesterday.
The urgency has only intensified amid the U.S. naval blockade of Iranian ports, which took effect on April 13 after the collapse of negotiations in Islamabad. The U.S. Fifth Fleet has surged assets to the region, and Central Command reports it has directed 31 vessels to turn around or return to port, and the U.S. military has since seized two ships in the Strait, a move Iran has called a violation of the ceasefire, which remains in effect, though the Trump administration has said all armed forces stand ready to resume combat operations should it expire. The Strait of Hormuz, which normally carries roughly 20 percent of the world’s seaborne oil trade, has seen traffic plummet by more than 90 percent since the Iran war began in late February.
Ethics probe added pressure
Complicating Phelan’s position further, Fox News reported that part of the friction stemmed from Phelan’s refusal to ignore a federal judge’s ruling that punishing Sen. Mark Kelly for reminding military officers of their duty not to follow illegal orders would violate his First Amendment rights. Also adding pressure was a reported ethics investigation, the existence of which created a persistent cloud over his standing in congressional oversight hearings. While few details have been made public, an official familiar with the matter said the probe was a factor. Phelan’s defenders argue he was scapegoated for structural problems, shipyard workforce shortages, supplier consolidation, and decades of underinvestment in maritime infrastructure that cannot be unwound in 13 months. But inside the West Wing, patience had run out.
Hung Cao steps into the top job
Cao, a Vietnamese-born refugee who served 25 years in the Navy as an explosive ordnance disposal officer and special operations leader, brings a sharply different profile to the role. He deployed to Iraq, Afghanistan, and Somalia and later ran unsuccessful campaigns for Congress and the U.S. Senate in Virginia before Trump nominated him as under secretary of the Navy in February 2025. He was confirmed by the Senate in October.
In his first public remarks since taking over, Cao outlined three priorities in a video posted to X: taking care of sailors and Marines, accelerating shipbuilding, and defending the homeland. “We’re going to build ships,” he said. “We need the platforms we need in order to defend this country.” At the Modern Day Marine exposition on April 28, he told industry partners the time had come for ‘generational changes’ to the military and urged them to help develop the best equipment available.
The White House has not yet named a permanent successor. Capitol Hill reaction was swift and divided. Senate Armed Services Committee Republicans largely backed the president’s move, citing the need for decisive leadership during the Hormuz standoff. Democrats warned that the revolving door of Pentagon leadership during an active conflict creates dangerous instability. The firing makes Phelan the first service secretary to depart during Trump’s second term, adding to a string of senior military dismissals under Hegseth that includes the prior chairman of the Joint Chiefs of Staff (Gen. Charles Q. Brown Jr.), the Army Chief of Staff (Gen. Randy George), and a prior Chief of Naval Operations (Adm. Lisa Franchetti).
Whoever inherits the secretary’s office permanently will face an immediate trial by fire: sustaining pressure on Iran, accelerating the Golden Fleet shipbuilding initiative, restoring readiness, and navigating a Pentagon where the defense secretary does not tolerate dissent.
For now, the Navy enters a period of extraordinary turbulence at precisely the moment the nation is asking it to do more than it has in decades.
