What does the Iran war mean for the US defense sector?

US defense companies are being called on to ramp up production to meet fresh demand from the war in Iran.

It opens up an existing rift between them and the Trump administration.

US President Donald Trump recently hosted executives from seven major defense contractors in the White House — part of an attempt by his administration to shore up the sector as the war against Iran intensifies.

The conflict has exposed strains within the US defense sector .

There are concerns over US stockpiles of long-range missiles and air-defence interceptors , and over the sector's capacity to ramp up production in the event of a prolonged conflict.

Trump said he had discussed "production and production schedules" with the companies, namely Lockheed Martin, RTX (Raytheon), BAE Systems, Boeing, Honeywell Aerospace and Northrop Grumman, at the White House meeting.

However, there have been reports that negotiations between the Pentagon and the country's biggest defense contractors for new production have not been concluded as quickly as the White House would like amid existing tensions.

Tensions between Trump and defense supplies
"There was criticism that the largest defense contractors in the United States had been lethargic, that they were not anticipating need and investing and taking risk," he told DW.

He threatened to remove them from government contracts if they did not increase investments in factories.

In January, Trump issued an executive order saying defense companies were "not permitted in any way, shape, or form to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget."
The Trump administration is also currently embroiled in a furious row with the AI start-up Anthropic , a supplier to the US military, over its refusal to allow the military to have unbridled access to its Claude chatbot.

Trump has specifically accused firms of spending too little on expanding factory capacity in favour of appeasing investors with mechanisms like stock buybacks.

The wars in Ukraine and Gaza increased demand from US allies for US-made weapons , and Trump previously criticized companies for not meeting demand quickly enough.

"We have many people [who] want the F-35 fighter jet, and it takes too long to deliver them to allies or to ourselves," he said.

"The only way they're going to be able to deliver them is if they build new plants.

They don't want to build new plants because it's expensive."
Philip Sheers, associate fellow with the Defense Program at the Center for a New American Security, says investment in the US defense industrial base is increasing, specifically in munitions and air defense.

However, he cautions that it will take time for these investments to translate into increased production rates.

"Standing up new facilities or increasing supplies of raw materials can take years, and we've seen that with many of the facilities that are still being built in the wake of the war in Ukraine," he told DW.

However, he said a significant portion of the blame for any sluggish production lies with the US government for its regular failure to agree on budgets in time amid political infighting.

"If the US government wants the defense industrial base to move fast, it needs to pass and appropriate budgets on time so that contracts can be signed, resources can be allocated, and industry can be incentivized to move," Sheers said, adding that the "consistent failure to pass budgets on time has become a geopolitical own goal of potentially historic proportions."
Byron Callan says the Trump administration's desire for defense companies to invest in increased production could be upended by the question of budgets.

Polling currently suggests the Democrats have a good chance of winning back control of the US Congress in the midterm elections in November 2026.

"That could really put a cap on defense spending," he said.

"This is an unpopular war and if that happens [Democrats winning], there's going to be an expectation for greater non-defense spending, on things like healthcare and infrastructure."
The US allocated $850 billion (€740 billion) towards defence in its 2025 budget, with the number due to hit $900 billion in 2026.

Trump has called for it to reach $1.5 trillion in 2027, alarming many experts who question the sustainability of US debt as it stands.

The defense sector is also now braced for the possibility that the war in Iran will drag on for far longer than anticipated.

When the Iraq War began in 2003, Kenneth Adelman, US Ambassador to the UN from 1981 to 1983, firmly believed 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 armed forces transformed his political perspective.

Despite still being a Republican, Adelman is now a vocal Trump critic.

He told DW he thinks the Iranian conflict could take on a similar dynamic.

" Iran has been planning for this for a long time ," he said.

"It has already gone on longer than the Pentagon has been planning.

And I have no faith in how the Pentagon plans these things after what I saw in Iraq."
The Trump family has, meanwhile, stepped up its own defense investments.

The President's sons Eric and Donald Jr.

have invested in a new drone company seeking to capitalize on a ban on new Chinese drones in the US.

Since the Iran war began on February 28, US defense stocks have retreated.

Although the Dow Jones US Aerospace & Defense Index jumped briefly at the start of the conflict, it has since fallen by about 3%.

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