When Donald J. Trump returned to the White House for his second term in January 2025, he wasted no time reaffirming the central economic principle that defined his first presidency: tariffs as the primary weapon of American industrial revival. His campaign promise of an “America First” economic policy has now been welded into the architecture of U.S. governance, with sweeping tariffs on imports from China, India, the European Union, Japan, South Korea, and even Canada.
To Trump’s domestic political base, this is evidence of consistency - proof that he is unafraid to take on “unfair” trading partners. To much of the world, it is confirmation that the United States, under Trump, views all economic relationships through a transactional, often adversarial lens.
Yet tariffs are not simply a domestic economic lever; in the interconnected world of 21st-century geopolitics, they are a strategic disruptor. Nowhere is this more visible than in the United States’ crown jewel of influence: its Military-Industrial Complex, the sprawling ecosystem of defense contractors, subcontractors, and global supply chains that sustains U.S. military dominance and binds allies into long-term security relationships.
Recent trends - canceled orders, restructured alliances, and accelerating diversification of arms procurement, suggest that Trump’s tariff policy is exerting quiet but profound pressure on this complex. And while the President insists that tariffs will strengthen America’s manufacturing backbone, their long-term effect may be to weaken one of America’s most powerful tools of global influence.
II. The Tariff Doctrine: Political Theatre Meets Economic Reality
Trump’s tariffs are rooted in a belief that the United States can force trade partners to concede better terms by raising the cost of entry into the American market. Steel and aluminum were among the earliest targets, with tariffs applied indiscriminately - even to allies like Canada, Japan, and members of the European Union.
The logic was straightforward: make imports more expensive, incentivize domestic production, and compel foreign producers to negotiate. But the real-world consequences have been more complex. Retaliatory tariffs by the EU, Canada, and others have targeted U.S. exports - including, crucially, aerospace and defense products.
For the defense industry, which depends on globally integrated supply chains, these tariffs act as a self-imposed tax. Specialized alloys from Canada, titanium from Japan, optics from Germany, and composite materials from Italy are not easily substituted domestically without either raising costs or sacrificing quality. The higher input costs ripple through to the final price tag of American fighter jets, missile systems, and naval vessels - making them less competitive in the global arms market.
III. Case Study One: The F-35 Lightning II and the Cost of Alienation
The F-35 Lightning II program is emblematic of both the promise and fragility of U.S.-led defense projects. With lifetime costs projected at over $1.7 trillion, it is the most expensive weapons program in history. It was designed from the start as an international endeavor, drawing in partners from the UK, Italy, Australia, Norway, Denmark, and the Netherlands - not only as buyers but as co-producers.
However, when tariffs on European metals and aerospace components increased production costs, some partners began questioning the value of the deal. The diplomatic tone set by Trump’s trade policy - blunt, transactional, and occasionally hostile - compounded these doubts.
Turkey’s dramatic expulsion from the F-35 program in 2019, after purchasing Russia’s S-400 missile system, was rooted in security concerns, but its aftermath is telling. Ankara accelerated its own TF-X fighter program, both to meet domestic needs and to position itself as an emerging exporter - potentially competing for markets that might once have been U.S. strongholds.
IV. Case Study Two: Indo-Pacific Recalibrations
In the Indo-Pacific, U.S. defense partnerships remain strong in principle, but tariffs have sown seeds of strategic hedging. Japan, while still a major buyer of U.S. hardware, is pushing forward with its F-X sixth-generation fighter in partnership with the UK’s BAE Systems. South Korea’s KF-21 Boramae project reflects a similar ambition: to develop an indigenous alternative that can be sold to regional partners without dependence on U.S. approval.
Australia, another key ally, has quietly expanded defense cooperation with European suppliers, particularly in naval shipbuilding. In all cases, tariffs didn’t cause the diversification, but they accelerated a pre-existing desire for greater autonomy - a desire rooted in uncertainty about the long-term reliability of U.S. supply lines and political commitments.
The U.S. Military-Industrial Complex rests on three pillars:
- Pentagon procurement, which guarantees a domestic buyer.
- Foreign Military Sales (FMS), formal government-to-government deals.
- Direct Commercial Sales (DCS) from private defense companies to foreign governments.
Foreign sales are not a luxury - they are a necessity. They help subsidize R&D costs, maintain economies of scale, and ensure production lines stay active between Pentagon orders. When tariffs alienate buyers, the immediate loss is economic; the longer-term loss is strategic.
The Pentagon may still buy American, but without a strong export market, per-unit costs rise, making even domestic procurement more expensive and politically contentious. This dynamic risks creating a feedback loop where shrinking exports lead to higher costs, which lead to smaller defense budgets, which in turn reduce U.S. military readiness.
VI. Historical Parallels: Economic Nationalism and Strategic Risk
The United States has been here before. The Smoot-Hawley Tariff Act of 1930, aimed at protecting U.S. farmers and manufacturers, provoked retaliation from trading partners, deepened the Great Depression, and undermined America’s global economic influence.
In 1971, Nixon’s unilateral suspension of the Bretton Woods gold standard rattled economic allies, signaling that the U.S. could upend long-standing arrangements with little warning. In both cases, strategic relationships suffered alongside economic ones - a reminder that in international affairs, trust is a currency just as valuable as gold or trade surpluses.
Trump’s tariff regime fits this pattern. It is not merely an economic measure but a statement of philosophy: alliances are conditional, and economic advantage trumps diplomatic continuity.
VII. The China and Russia Factor
As U.S. allies reconsider procurement from Washington, China and Russia are moving aggressively to fill the gaps. Beijing’s AVIC and NORINCO offer competitive fighter jets, drones, and missile systems - often bundled with infrastructure investments under the Belt and Road Initiative. Russia’s Rosoboronexport markets the S-400 and Su-57 to nations willing to endure U.S. sanctions, with India as a prominent example.
The more Washington uses trade and sanctions as blunt instruments, the more foreign buyers seek alternative suppliers - not only to save money, but to insulate themselves from American political leverage.
VIII. Domestic Economic Boomerang Effects
Tariffs designed to protect American jobs have also created domestic economic stress. Retaliatory measures have battered U.S. agricultural exports, forcing multi-billion-dollar federal aid packages to farmers. Manufacturing sectors dependent on imported inputs - automotive, aerospace, electronics - face higher costs, making them less competitive globally.
For the defense industry, diminished export markets mean the Pentagon pays more for the same equipment, straining the defense budget at a time when the national debt is swelling past historic highs.
IX. The Trust Deficit: A Strategic Liability
In the defense trade, trust is the foundation. Allies invest in American systems not only for their technical superiority but for the assurance that the U.S. will remain a reliable partner over decades-long maintenance cycles. Tariffs disrupt that perception. They introduce uncertainty about future costs and signal that even allies can be subject to punitive measures for economic reasons unrelated to security cooperation.
Rebuilding that trust, once lost, will require more than a change in tariff schedules - it will require a fundamental shift in how the U.S. conceives of its alliances.
X. The Next Decade Outlook: A Multipolar Defense Industry by 2035
If Trump’s tariff doctrine continues through his second term and sets the tone for U.S. trade policy beyond 2029, the global arms market could enter a fundamentally different phase by 2035. What has been for decades a U.S.-centric ecosystem may fragment into a truly multipolar defense industry.
Three long-term trends appear likely:
In this environment, the U.S. would remain a major player - but no longer the undisputed hub of global defense. Its influence would be contested in every major arms market, and its ability to use defense sales as a tool of diplomacy would be constrained by the presence of credible, politically aligned alternatives.
XI. Conclusion: Tariffs as Strategic Self-Sabotage
Trump’s tariffs are meant to revive American industry, but their deeper legacy may be the erosion of one of America’s greatest geopolitical assets. By straining alliances, raising costs, and pushing buyers toward competitors, these policies risk reshaping the defense industry into a multipolar contest where U.S. primacy is no longer assured.
In the arms trade, as in diplomacy, the most valuable commodity is not protectionism - it is trust. And trust, once lost, is a weapon no tariff can rebuild.
Let’s Shape the Future of Strategic Trade, Defense Cooperation, and Global Stability Together
If you are a policymaker, defense strategist, academic, or part of an international organization assessing the long-term impact of U.S. trade policy and military-industrial trends, we invite you to collaborate with us. Institute for Policy & Diplomacy offers confidential briefings, scenario planning, and strategic dialogue on how shifting economic doctrines, such as the current U.S. tariff regime, are reshaping alliances, defense markets, and geopolitical stability.
Our work is grounded in rigorous analysis, historical context, and forward-looking policy frameworks designed to help stakeholders navigate an increasingly multipolar world. Together, we can anticipate risks, identify opportunities, and craft responses that preserve security and trust in an era of rapid change.
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