Tariffs Make Defense Production More Expensive

Tariffs are a major element of President Trump’s economic and foreign policies. They are an attempt to revive American manufacturing after decades of outsourcing and to reduce American dependence on China, the United States’ greatest geopolitical rival. Supporters call them a bold departure from a failed free-trade consensus, while opponents call them a tax hike on the middle and working classes.

At the intersection of economic and national security concerns, Trump’s tariffs pose a problem for defense. They are likely to make it more expensive and more difficult for the U.S. to defend itself. Many of the items Trump has targeted with tariffs—from steel to copper to rare earth elements—are materials needed by the United States Armed Forces in large amounts.

Holding down the cost of major military systems is often difficult for the Pentagon already. From the infamous struggle to get the F-35 fighter plane’s price under control to the expensive delays of the forthcoming Constellation-class frigate, military equipment too often ends up costing significantly more than the initial estimate given by the builder. If defense manufacturers find they must pay higher prices for the materials they need to produce weapon systems, the military will suffer even more delays, and the American taxpayer will have to fork over even more money.

With a federal court blocking many but not all of Trump's tariffs this week (a ruling now on temporary hold by an appeals court), the defense industry needs clarity as to what it can expect from his administration. There are dangers to this amount of uncertainty as to whether America will be a reliable importer of items key to its national security. A country’s defense depends on the strength of its industrial base, and its major defense producers need to be sure they have the materials they need. Both tariffs and the threat of them make it harder for them to do their job.

The defense industrial base already suffers from multiple constraints. The United States Navy has only four publicly owned shipyards where it can repair and maintain its vessels, down from eight immediately after the Cold War. Defense manufacturers struggle to hire and retain enough skilled workers for their factories, as their current workforce ages and demand for their products increases. When America began arming Ukraine after Russia invaded it in 2022, companies producing weapon systems like HIMARS and the Javelin missile were sometimes limited to one or two factories. The last thing the defense sector needs is the burden of higher prices to manufacture its products.

Not All Alike

It is a mistake to see tariffs as a one-size-fits-all tool to use when approaching allies, potential enemies, and everyone in between. Putting tariffs on a rival great power can be a sensible way of reducing one’s reliance on that potentially hostile country. Putting them on longtime friends and partners makes much less sense.

There are geopolitical and strategic as well as economic benefits to America decoupling from China as much as possible. Not only does the People’s Republic account for a large percentage of the manufacturing jobs that have disappeared from the U.S. in recent decades, but as China has industrialized over the past several decades, it has grown into a military rival to the United States. Its armed forces pose a threat to American allies like Japan, the Philippines, Australia, and especially Taiwan.

The contrast between China and Canada could not be starker. Canada, along with the U.S., is a charter member of NATO. Canadian troops have fought alongside American troops in conflicts from World War I to the war in Afghanistan. The fact that Canada sends large amounts of goods across the border into the U.S. should not be a cause for concern.

What is true for countries is also true for economic sectors. Those that are essential to national security deserve more and closer attention than those that support ordinary private consumption. A commander in chief must be discerning when choosing what to place tariffs on. Let’s look at a few materials key to America’s defenses.

Steel

Of all the materials discussed in news coverage and analysis of Trump’s tariffs, steel probably gets the most attention. Its economic and cultural status is iconic. America’s mass production of steel in the nineteenth and twentieth centuries was vital to making it the dominant global industrial and military power. The fact that American steel manufacturing has declined since the late twentieth century, along with the political appeal of helping depressed former steel towns, might seem to make tariffs on steel a logical step.

But steel is widespread in defense manufacturing. From submarines and surface ships to fighter jets, helicopters, and tanks, the U.S. Armed Forces simply could not do without steel. To take just one example, the Arleigh Burke-class guided missile destroyers that have confronted Houthi threats to international shipping each have hulls that are made entirely of steel.

The top three sources of U.S. steel imports—Canada, Brazil, and Mexico—together account for about half of the steel that enters the U.S. Other countries in the top ten include NATO members Germany and the Netherlands, as well as close East Asian allies Japan, South Korea, and Taiwan. By contrast, China, which is tenth on the list, accounted for less than two percent of steel imports last year.

Picking a fight with neighboring countries that provide you with materials you need to defend yourself is not a smart thing to do. Picking such a fight with countries whose troops your own troops may have to fight alongside one day is equally wrongheaded. Meanwhile, though it’s easy to get applause by invoking NAFTA and the movement of manufacturing jobs to Mexico, punishing Mexico with tariffs, including on its steel, will not make America better off.

Copper

Chile is America’s number one source of imported copper. Together, Chile and Canada provide more than two-thirds of the copper that comes into the U.S. While Chile is not a military ally of the United States, the two countries have had a bilateral free trade agreement in place since 2004.

Copper is widespread in the making of U.S. military munitions. It is found in artillery shells, antitank rounds, and the jackets of small-arms rounds, among others. Alienating a prime source of this important metal is a bad idea.

Trump exempted Chilean copper from his 10 percent tariff on other Chilean exports. But given Trump’s habit of governing by whim, there is no guarantee whatsoever that this important metal will not be hit by tariffs in the future. If the U.S. ever wants to be the Arsenal of Democracy again, making copper more expensive will hamper those ambitions.

Aluminum

Aluminum is another major metal Trump has long fixated on as a domestic industry to protect. It is also an element the military relies on. The Army’s Abrams tanks, the Navy’s littoral combat ships, and a wide variety of the Air Force’s aircraft all contain aluminum. Roughly half of all the aluminum the U.S. uses comes from other countries—and Canada is the number one source. This is another reason not to start a trade war with America’s neighbor to the north.

Titanium

The Air Force’s F-22 fighter planes—one of which shot down a Chinese spy balloon over American soil two years ago—each contain over 9,000 pounds of titanium. The vast majority of U.S. titanium imports come from Japan, a vital and longtime ally that shows no sign of backing down in the face of Trump’s protectionism. As with Canada, alienating Japan is not smart.

Rare Earth Elements

Some of the most difficult metals to find are vital to defense manufacturing. For example, one of these rare earths, tantalum, is used in the jet turbines of military aircraft. Each U.S. Navy Virginia-class attack submarine, meanwhile, contains about 9,200 pounds of rare earth materials. Unfortunately, the People’s Republic of China dominates and controls the vast majority of rare earth element mining and processing.

Unlike other elements used by the Department of Defense, higher prices for rare earths may well be worth it for the sake of decoupling from China. While the U.S. has only a limited supply of rare earths on its own soil, it can and should mine more. This is a case where protectionism is worth the downside.

Other Options

Some American attempts to reshore manufacturing began before Trump returned for his second term. The CHIPS and Science Act of 2022, for example, incentivizes semiconductor manufacturing on American soil. If the current administration is worried that America will not have a large and productive enough defense industrial base, it can push Congress to pass similar legislation for defense manufacturing. It should be noted, though, that such efforts will likely take years to come to fruition.

There are also ways the U.S. military can attempt to bypass the constraints on the traditional defense industry. Ukraine shows how a country can quickly develop new, small armaments with which to cripple larger weapon systems on the enemy side. When faced with Vladimir Putin’s large, conventional military, the Ukrainians embraced innovation. Ukrainian air and sea drones have devastated Russian ships, planes, helicopters, oil refineries, and defense infrastructure. They have even struck Moscow itself. Adopting a similar innovative mindset, one that challenges military and civilian engineers to quickly develop cheap but deadly weapons, could help the U.S. Armed Forces bypass the downsides of Trump’s tariffs.

It will be a long time, however, before the U.S. military can learn to do this on a wide scale. The Pentagon’s development and procurement structures are notoriously slow to change. Even if America’s military attempts to massively innovate, whatever drones and similar weapons it develops will not be a full replacement for traditional systems. Defense production takes patience—a word that seems not to be in the vocabulary of the current commander in chief.

Reducing America’s trade deficit, reviving its industrial base, and ensuring it has a strong military are each complex challenges. They require careful incisions with scalpels, not the protectionist sword that Trump wields (or Elon Musk’s chainsaw). While there are some benefits to some tariffs, using them too broadly can make it harder for the United States to defend itself.

Michael D. Purzycki is an analyst, writer, and editor based in Arlington, Virginia. He writes The Non-Progressive Democrat on Substack. Follow him on Twitter at @MDPurzycki.