America’s Arsenal Problem

The U.S. defense industrial base has faced persistent challenges since 2019, exacerbated by the COVID-19 pandemic, Russia’s invasion of Ukraine, and China’s supply chain disruptions. Policy responses include creating the assistant secretary of defense for industrial base policy in 2021, establishing the Office of Strategic Capital in 2022, and publishing the first National Defense Industrial Strategy in 2024. Both Biden and Trump administrations have used the Defense Production Act to fund critical minerals, rare-earth supply chains, and programs like Title III and the Industrial Base Analysis and Sustainment initiative. The base now blends legacy defense contractors with newer tech firms, creating a dual challenge: rebuilding depleted munitions and ship stocks while integrating AI, autonomous systems, and quantum computing. Conflicts in Ukraine and Iran have shown the effectiveness of low-cost, commercially available tech like AI-enabled drones, pushing the U.S. to adopt faster, cheaper procurement methods. Fiscal instability remains a major hurdle, as uneven appropriations cycles disrupt production planning, especially for smaller suppliers. Policymakers must secure multiyear funding to provide predictability for defense companies. Domestic manufacturing capacity has also eroded due to trade practices, requiring targeted government interventions and private investment to rebuild. The Pentagon’s traditional reliance on expensive, customized systems—like F-35 jets and Patriot/Tomahawk missiles—must evolve to incorporate agile, commercially derived solutions. This shift demands embedding innovative manufacturing processes into both current and future defense systems, ensuring long-term resilience against global threats.