An Era of Global Rearmament and the U.S. Defense Industrial Base

Setting the scene

Since the publication of the first edition of this report in May 2025, the strategic environment around defense has continued to evolve significantly. This update reflects developments in acquisition reform, industrial policy, allied investment, and capital mobilization that are reshaping the U.S. defense industrial base (DIB). When we first wrote about the DIB, many of its most acute vulnerabilities were already visible. Support for Ukraine following Russia’s full invasion exposed the zero-sum nature of modern deterrence for the kinds of systems the American military spent the post-Cold War period fielding. Transfers of munitions and platforms to partners revealed constraints in replenishment timelines, surge capacity, and supply chain resilience. The American arsenal of democracy had been exposed as fundamentally underequipped for the task at hand.

But urgency had not yet caught up with analysis. Some observers of the DIB often felt as though they were “shouting at the rain”—cataloguing structural weaknesses without corresponding momentum for systemic change.

That has now shifted.

China’s temporary restrictions on exports of critical minerals last year highlighted the fragility of key supply chains and the strategic leverage embedded in industrial dependencies. Recent operations in Iran and the Western Hemisphere reinforced the reality that the United States must continue to be prepared to manage multiple theaters at once.

At the same time, assumptions that underpinned the post–Cold War security architecture—including expectations of allied alignment—are being materially reshaped. Many U.S. allies were already pursuing a stronger sovereign defense capability, but developments in the transatlantic alliance have accelerated these efforts in Europe where countries have accelerated defense spending and are investing more heavily in domestic production capacity. This trend is present in other regions as well. Globally, countries are also diversifying supply chains and cultivating new foreign suppliers to reduce reliance on any single source. The result is sharper competition and increased pressure on all providers to deliver speed, reliability, and value.

These dynamics have informed in a series of executive actions, legislative reforms, and industrial initiatives that more directly reflect the scale of the challenge. The question is no longer whether the defense industrial base requires modernization. It is whether reforms will be sufficient—and fast enough—to match the tempo of strategic competition.

Indeed, since our last edition, a broader recognition has taken hold—across political parties, corporate boardrooms, and capital markets—that defense industrial capacity is not a narrow policy issue but a core pillar of national resilience and central to deterrence itself. The shift reflects the natural culmination of converging and simultaneous pressures that made continued denial untenable. It is for these reasons that, in October 2025, JPMorganChase launched its Security and Resiliency Initiative (SRI), a ten-year, $1.5 trillion plan to facilitate, finance, and invest in industries critical to economic security and resilience, including defense and aerospace.

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