Why the U.S. Military Needs Allies for its Industrial Base

The lessons on industrial strength apply to the U.S. military too. Although it is still the most powerful force the world has ever seen, the nation’s defense industrial and technological base does not match these capabilities after decades of being hollowed out through globalization. This means that much of the industry and technology needed to support the U.S. military at times of conflict are now in the hands of America’s most capable opponent, China.

China’s control over the U.S. military supply chain is significant. The People’s Republic, which has 31.6% of manufacturing output (compared to the US’s 15.9% global share), is the largest supply chain supplier to the Army, Air Force, Navy, and DOD Agencies. Even though the Army has decreased its exposure to China, a report from summer 2024 revealed that the Air Force and Navy have actually increased their reliance on Chinese suppliers. 

This is not just a conceptual danger to U.S. national security. China already leads the world on export controls, accounting for a fifth of the global total of restrictions. It is now bringing these to bear on the US.

On 3 December, Beijing announced export restrictions on yet more minerals – this time gallium, germanium, and antimony – bringing the total number of items banned for export to the U.S. to twenty. Beijing has, over the years, built up a choke hold on critical minerals and industrial components which are vital to the U.S. military. It produces, for example, 98% of the world’s gallium, used in radar systems and missile defense, and about half of global production of antimony, which is important for night vision goggles and ammunition.

New technologies such as electric vehicles are almost certain to provide China with even more leverage over the defense industrial and technological base. EV batteries, for instance, require graphite for their anodes, but 90% of global graphite is from China.

The question is what the U.S. can do about the reliance on China. There are two choices. It can either make this switch away from a Chinese-dominated supply chain alone. Or, it can leverage its enduring relationships with like-minded democracies and treaty allies through a process of ally-shoring, a strategy that involves reworking supply chains to among trusted friends and allies.

There are already strong efforts being made to “de-Chinafy” the defense industrial and technological base. The Department of Defense has, for example, invested more than $439 million to establish domestic supply chains for rare earths, which are vital for modern weapon systems like F35s but which are mainly refined in China. This DOD investment is on track to create a resilient supply chain by 2027. 

But for many critical minerals, the U.S. simply cannot do it all by itself. Copper, a crucial part of the overall U.S. industrial base, is barely produced in the United States, with just 3% of global output. China, on the other hand, controls 44% of the world’s copper production, giving them strong control over not only the supply, but also the price. In March 2024, copper rose to its highest price in more than a year after Chinese smelters pledged to control capacity. 

The answer to this problem lies in America’s allies. If we include NATO and Indo-Pacific allies such as  Canada, Germany, and Japan, then together U.S. allies control 18% of the refined copper market (2023 figures), making it much harder for China to manipulate the market against U.S. interests. 

It is not just commodities where ally-shoring can help the U.S. military. AUKUS is already proving how the U.S. and its allies (the UK and Australia in this case) can work together on advanced technologies, to the benefit of all involved. This includes the development not only of new submarines, but also (through AUKUS Pillar 2) emerging technologies like artificial intelligence and quantum. Talks are underway with other allies to join AUKUS, including Canada, which is already a critical supplier to the U.S. military. Of fifteen critical technologies listed in a report on U.S. national security supply chains, Canada is a top five supplier in two thirds of them.

Guaranteeing access to materials and technologies with a reduced threat of price manipulation are just two of the benefits that ally-shoring brings. Domestic job creation, more sustainable supply chains, and the ability to provide allies with more economic opportunities to prevent them being courted by China are all advantages too. 

Founding Father John Dickinson once said, in reference to the early colonial struggles against Britain, that “By uniting we stand, by dividing we fall”. 257 years later this sentiment still applies, but this time the UK - and America’s other allies, including Canada - need to lie within the fold. Only through ally-shoring can the U.S. defense industrial and technological base be best placed to support the U.S. military for whatever might come. 

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