America's defence industry still accounts for 43% of the total value of weapons exported globally each year (China's makes up just 6%), but it no longer churns out the mass of materiel that sustained military operations from the 1940s to the 1960s. Instead it makes relatively small numbers of the world's most sophisticated and expensive military machines.
In 2022 there were just 29,000 American defence firms, down from 42,000 in 2000. Many are the sole supplier of whatever device or component they make, such as the rocket motors inside Javelin anti-tank missiles or specialised bearings for submarines. The average employee on the floor of one big defence factory is 59 years old. Most "systems"—the fanciest devices—take a year to manufacture, rising to 18 months for a fifth-generation fighter jet and two years for long-range missiles.
In 1956 the American air force had 26,000 planes; by 2025 it had dipped below 5,000. Sixth-generation fighter jets, currently under development, could cost as much as $300m each; the air force plans to buy only 20% as many as the fifth-generation jets it is commissioning this decade. Since 1980 the share of the armed forces' budget going to care for and repair existing systems has doubled.
The Joint Systems Manufacturing Centre (JSMC) in Ohio has been America's main factory for armoured vehicles since 1942. It no longer builds new Abrams tanks; instead it refurbishes stripped-back hulls and turrets from old models stored in Alabama. Each refit takes roughly two years. Maximum output is 30 tanks a month. Poland ordered a big batch in 2022, less than six weeks after Russia invaded Ukraine, and is still waiting for most of them. JSMC sent 31 Abrams tanks to Ukraine in 2023; Russia destroyed 20 in three months, after which the rest were largely withdrawn from the front line because they were vulnerable to Russian artillery and kamikaze drones.
The Pentagon set a target of producing 75,000 155mm artillery rounds a month by early 2025 and missed badly, managing just 40,000—less than a third of Ukraine's monthly usage. At current procurement rates it would take seven years to bring ammunition stocks back to where they were before military aid to Ukraine began. In a 2023 war game run by the Centre for Strategic and International Studies simulating a conflict with China over Taiwan, America exhausted its inventory of long-range missiles within three weeks; replenishment would take eight years.
America devoted nearly $1trn to defence in 2024, four times China's outlay. The EU spent $378bn, or 1.9% of GDP—30% more than in 2021. NATO members promised in June 2025 to raise spending to 3.5% of GDP by 2035. Global defence spending in 2024 was $2.7trn, up from $2.5trn in 2023, the biggest annual increase since the end of the cold war.
China has a near-monopoly on rare-earth metals needed for jet engines and brushless drone motors, and is the main supplier of nitrocellulose, a component of gunpowder. In 2015 the United States Naval Academy reintroduced celestial navigation onto its curriculum, for fear that satellite-navigation systems might be degraded by cyberwarfare. The IMF estimates that 20% of all industrial policies worldwide in 2023 were in industries subsidised, at least in part, for national-security reasons.
America's air-refuelling tanker fleet averages more than 50 years old. China's growing missile reach is forcing the air force to adopt "Agile Combat Employment" (ACE), a doctrine of dispersing aircraft to small bases across the Pacific to survive attack, rejoining in the air to strike and then scattering again. The approach draws on the island-hopping campaigns of the second world war and Ukraine's success in keeping planes flying under relentless bombardment. During REFORPAC, the biggest American air-force exercise in the Pacific since the cold war, more than 400 aircraft operated from 50 locations thousands of miles apart. America is reviving old wartime facilities, including Tinian—once the world's largest air base, from which the atom bombs were loaded onto B-29s in 1945—as backup landing sites. The island's four runways at North Field are being refurbished to complement Andersen air base on Guam. American think-tanks argue the air force is neglecting passive defences such as hardened concrete shelters and portable pop-up shelters.
America's Indo-Pacific Command (INDOPACOM) is headquartered in Hawaii, 3,600 nautical miles from the first island chain. Kadena, on Okinawa, is America's biggest air-force base in the region. The Trump administration's core defence-budget request is flat in real terms—a cut after inflation—despite boasts of a trillion-dollar defence budget.
By early 2026 Western defence firms' shares traded at around 35 times their forecast earnings, the priciest in modern history—not far off Nvidia. Across the rich world, weapons-makers were up by 52% over the preceding 12 months. In January 2026 Donald Trump issued an executive order prohibiting large American defence contractors from buying back shares or paying dividends, and mused that their bosses' annual pay should be capped at $5m (a quarter of typical 2024 compensation). The order lacked legal power but sent a clear message. In Europe, Greens in the European Parliament called for a windfall tax on profitable defence firms. During the two world wars the British government imposed steep windfall taxes on armaments manufacturers; after America entered the second world war in 1942, its government repeatedly renegotiated prices agreed in contracts with weapons firms—always downwards.
Ukraine's wartime experience suggests that industrial capacity in peacetime is no longer necessary for success during war. Its arms industry grew from $1bn in 2022 to a capacity of $35bn by 2024, driven overwhelmingly by nimble private firms rather than conversion of existing factories. The most fungible industrial resource has proved to be skilled workers: it takes two years to retrain an oil-and-gas engineer in aerospace.
Mausoleum: The final and funniest folly of the rich.