The war in Iran has opened cracks in the US military-industrial complex. As Donald Trump pushes for faster production increases, arms manufacturers face capacity constraints, sluggish investment and an uncertain budget framework
American president Donald tramp he recently hosted the CEOs of seven major arms manufacturers at the White House. It was part of his administration's attempt to strengthen the sector while fighting the war Iran intensifies.
The conflict has shown that there are tensions within the US arms production sector, that there are concerns about the US stockpile of long-range missiles and air defense interceptors, as well as about the sector's ability to increase production in the event of a prolongation of the conflict, reports Deutsche says.
At the meeting, Trump discussed "production and production schedules" with Lockheed Martin, RTX, BAE Systems, Boeing, Honeywell Aerospace and Northrop Grumman.
There are reports, however, that negotiations between the Pentagon and the largest arms manufacturers in the United States on new production have not been completed as quickly as the White House would like amid existing tensions.
Photo: US Central Command via APAn American F-35 aircraft that is often used in missions in Iran
Tensions over Trump
Byron Capan, an analyst at Washington-based Capital Alpha Partners, says major US arms manufacturers are under constant criticism for being "risk averse" and focusing on returning dividends to shareholders rather than reinvesting.
"There has been criticism that the largest arms manufacturers in the United States are lethargic, that they did not anticipate needs, invest and take risks," Kapan tells DW.
Before the US began bombing Iran, tensions simmered between the Trump administration and America's largest arms manufacturers. Trump has regularly criticized those companies, because, in his opinion, they prioritized dividends to shareholders and salaries of managers over investments in infrastructure and production.
He also criticized those who do not meet production deadlines and exceed budgets. Previously, he said of the company RTX (formerly Raytion) - which is the main producer of missiles and air defense interceptors used by the US military in the Iran conflict - that it is "the slowest in increasing the volume, and the most aggressive in spending on its shareholders, and not on the needs and demands" of the US military.
The president threatened to cancel state contracts with that company if it did not increase investments in factories.
In January, Trump issued an executive order stating that arms companies "are not allowed to pay dividends or buy back stock in any way until they can produce a superior product on time and on budget."
The Trump administration is also currently in a bitter dispute with artificial intelligence company Anthropic, a supplier to the US military, over its refusal to allow the military unrestricted access to its Claude chatbot.
Photo: US Navy via APThe Pentagon and the arms industry are at odds
More production – and faster
In particular, Trump accused companies of spending too little on expanding factory capacity in favor of "quieting" investor concerns with mechanisms such as stock buybacks.
Share buybacks occur when companies use realized profits to buy back their own shares, thus reducing the number of publicly available shares and potentially increasing the value of the remaining individual shares.
The wars in Ukraine and Gaza have increased demand from US allies for US-made weapons, and Trump has previously criticized firms for not meeting demand fast enough.
"We have a lot of people who want the F-35 fighter jet, and it's taking too long to get them delivered to allies or to us," Trump said. "The only way they're going to be able to supply them is to build new factories. And they don't want to build new factories because it's expensive."
Photo: AP Photo/Bilal HusseinAmerican bombing of targets in Lebanon
Questions about the defense budget
Philip Shears, a fellow at the Center for a New American Security's Defense Program, says investment in the U.S. arms industry is increasing, particularly in munitions and air defense. However, he warns that it will take time for those investments to materialize into increased production rates.
"Building new plants or increasing raw material stocks can take years, and we've seen that with many plants still under construction after the start of the war in Ukraine," he told DW.
Shears believes that a significant part of the blame for any slow production should be attributed to the US government due to its constant failures to reach a budget agreement in time due to political conflicts.
"If the U.S. government wants the arms industry base to grow rapidly, it must pass and approve budgets in time so that contracts can be signed and resources allocated. And so that the industry can be incentivized to act," he said, adding that "the consistent failure to pass a budget on time has become a geopolitical own goal of potentially historic proportions."
Byron Callan says the Trump administration's desire for arms manufacturers to invest in increased production could be threatened by a budget issue.
Polls currently show that the Democrats have a good chance of regaining control of the US Congress in the midterm elections in November.
"That could then really limit defense spending," he says. "This is an unpopular war, and if the Democrats win, there will be more spending outside of defense, on things like health and infrastructure."
The US has set aside $850 billion for defense in its 2025 budget, and that amount should rise to $900 billion in 2026. Trump has pledged to make it $1,5 trillion in 2027, causing alarm among many experts who have questioned the sustainability of the U.S. debt in its current form.
Photo: Abbas Zakeri/Mehr News Agency via APThe search for survivors after the Minab school attack
Iran – eternal war?
The arms sector is also now preparing for the possibility that the war in Iran will take much longer than anticipated.
When the war in Iraq began in 2003, Kenneth Adelman, the US ambassador to the UN during the administration of President Ronald Reagan, firmly believed that it would be a quick and easy victory for the US.
However, the way that war dragged on and became a quagmire for the US military changed his political perspective and despite still being a Republican, Adelman is now a vocal critic of Trump. He tells DW that he thinks the Iranian conflict could take on a similar dynamic.
"Iran has been planning this for a long time," says an experienced diplomat. "It's already taking longer than the Pentagon planned. And I don't believe the Pentagon is planning these things after what I saw in Iraq."
A protracted conflict would likely mean an increase in orders for America's leading arms firms, as well as a rise in stock prices.
The Trump family has increased its own defense investments. A few days ago, the president's sons, Eric and Donald Jr., invested in a new drone company to take advantage of the ban on new Chinese drones in the US.
Since the start of the war on February 28, the value of American stocks in the arms industry has fallen. Although the Dow Jones Industrial Average jumped briefly at the beginning of the conflict, it has since fallen again by about three percent.
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