The tag team of Lex Luger and Davey Boy Smith was formed on January 2, 1995 edition of Monday Night Raw when they defeated the team of Bam Bam Bigelow and Tatanka during Luger's feud with Ted DiBiase's Million Dollar Corporation. They also had a series of matches at house shows that month against Bigelow and King Kong Bundy. The following month, Luger was wrestling Bundy when Tatanka interfered; Smith came to the ring to help Luger. The team was later dubbed Allied Powers bringing the United States and the United Kingdom together. Smith had also been a tag team partner and ally of Luger's real-life friend Sting in World Championship Wrestling during 1993.
The team's success declined in August 1995, and they lost a match to Men on a Mission on August 11. The following night, on a Madison Square Gardenhouse show, Smith grabbed the mic and asked fans to tone down their "U.S.A." chant out of consideration to him, but they refused and kept on doing the chant. Smith deserted Luger by walking away during the scheduled match against the Blu Brothers. Smith also walked out on Luger during several matches against Owen Hart and Yokozuna. On the August 21 edition of Monday Night Raw, Luger and Smith were scheduled to take on Men on a Mission. Luger couldn't perform in the match due to a family emergency so Smith asked then-WWF World Heavyweight ChampionDiesel to become his partner for only one night, since Diesel was feuding with King Mabel and would face him at SummerSlam 1995 for Diesel's WWF World Heavyweight Championship. During the match, Smith turned heel after hitting Diesel from behind and assisting Men on a Mission in an attack on the champion. Luger took the opposite side in the feud between Mabel and Diesel, as he got involved at SummerSlam to prevent Sir Mo from interfering on Mabel's behalf. With no long-term contract, Luger signed with WCW, appearing on the first episode of Monday Nitro on September 4, 1995, thus ending the Allied Powers.
Aftermath
In a subsequent interview, Smith, now managed by Jim Cornette explained that he had turned because of resentment at American fans' only chanting "U.S.A.", implying support for Luger only. A rebuttal interview with Luger was supposed to take place but was canned after Luger left the WWF. Smith went on to feud with Diesel and other faces while Luger, now in WCW, became a tweener that only sought the WCW World Heavyweight Championship. Smith, along with Hart Foundation stablemate and relative Jim Neidhart, would leave the WWF after the Montreal Screwjob in November 1997, and join WCW. On June 29, 1998, Smith and Neidhart lost to Luger and Sting in the only match in which the former tag team partners met.