America Said It Was Rebuilding. Iran Is Checking the Work.

What the Tariffs Were Supposed to Deliver

The economic nationalist argument for tariffs was never just about trade balances or manufacturing jobs, though those were the politics. The serious version of the argument — the one I've found persuasive — was strategic: China controls roughly 30 percent of global manufacturing output to America's 17 percent. Its shipbuilding capacity is approximately 200 times greater than ours. [3] Dependence on foreign supply chains is a national security vulnerability. Tariffs, combined with domestic investment incentives, would reshore critical production and rebuild the industrial capacity America would need in a real conflict. That was the argument. It was a good argument. Now comes the part where we ask whether it worked.

What the Pentagon's Own Officials Are Saying

In February, Michael Cadenazzi — the assistant secretary of defense for industrial base policy — spoke at the Hudson Institute. His remarks were politely devastating. [3] "We spent billions on the defense industrial base over the past decade," Cadenazzi said. "The problems that existed 10, 15 years ago are sometimes worse. That's a terrible investment." He described an industrial base shaped by exactly the wrong incentives: annual budget cycles that push prime contractors to purchase materials year-to-year, driving demand volatility down through the entire supply chain until it lands on small subtier suppliers with thin margins and no surge capacity. [3] When one of those suppliers closes its doors, recertification takes years. When one receives a sudden surge order, scaling up is both a near-term operational challenge and a long-term business risk — because today's emergency purchase may be next year's budget cut. Tariffs can protect a domestic industry from foreign competition. They cannot, by themselves, repair the structural economics of a supply chain that has been starved of consistent demand signals for two decades.

We used to put five million dollars down when we really needed 55. We're peanut-butter-spreading less and focusing on fewer, bigger wins.

— Michael Cadenazzi, Assistant Secretary of Defense for Industrial Base Policy, February 2026

The Fragility Nobody Fixed

Deloitte's 2026 Aerospace and Defense Industry Outlook is blunt about what the sector is facing: persistent demand growth is occurring alongside shortages of materials, skilled labor, and geopolitical disruption, "keeping the A&D supply chain under pressure through at least 2027." [2] The industry faces what the report calls a paradox — supply chains must simultaneously become more efficient and more resilient, two objectives that often pull in opposite directions. Meanwhile, more than three-quarters of manufacturers, according to the National Association of Manufacturers' 2025 quarterly surveys, cited trade uncertainty as their top concern. [4] That uncertainty — which tariff policy both addressed and, in some respects, created through its own volatility — has discouraged exactly the kind of long-term capital commitment that a healthy defense industrial base requires. Manufacturers need stable demand signals to make factory investments. Volatile tariff schedules and annual appropriations cycles produce the opposite of stability. This is not an argument against economic nationalism. It is an argument about what nationalism alone can and cannot accomplish.

On the Wrong Argument Being Made

Some corners of the commentariat are currently framing the Iran operation through a guns-and-butter lens — treating military expenditure as a drain on domestic programs and presenting the conflict's cost as an argument for limiting the campaign. That framing gets the analysis exactly backwards. The question isn't whether military operations cost money. They obviously do. The question is whether the country built the industrial and strategic capacity to conduct those operations sustainably. A serious defense posture doesn't compete with fiscal responsibility — it requires fiscal discipline applied consistently, with long-term demand signals rather than annual budget theatrics. The critique that matters here isn't "we're spending too much on guns." It's "we spent a lot building guns and didn't get the production capacity we paid for." Those are fundamentally different arguments. Only one of them is useful.

What Economic Nationalism Actually Requires

The good news is that the right moves are finally being made. The 2026 National Defense Authorization Act granted the Pentagon sweeping new authorities to rebuild the defense industrial base — multiyear contracts of five to seven years, streamlined acquisition pathways, concentrated investment in solid rocket motors, critical minerals, and energetics production. [3] These are exactly the kinds of consistent, long-horizon demand signals that subtier suppliers need to make capital investments. The administration is trying to stop peanut-butter-spreading and start placing real bets. That deserves credit. The uncomfortable news is that this reform is happening now, in week two of a high-intensity air campaign, burning through the stockpiles those reforms were designed to rebuild. [5] Cadenazzi's multi-year contracting strategy will bear fruit — but not before the Ford carrier strike group wraps what may be a record eleven-month deployment, not before the tanker fleet accumulates wear it will take years to recover, and not before several more weeks of Tomahawk expenditure that can't be quickly replaced. The lesson isn't that economic nationalism was wrong. It's that it was necessary but not sufficient. Tariffs were the right frame for the problem; they were never the complete solution to it. A genuine defense-industrial revival needs consistent demand signals, sustained investment in subtier suppliers, a workforce pipeline that hasn't spent thirty years being told manufacturing is a backup plan, and a budget process that stops treating munitions as the first thing cut when appropriators need room.

Operation Epic Fury may well succeed on its military objectives. Iran's ballistic missile capability is being systematically dismantled. The regime faces pressure it hasn't seen in a generation. [5] Those are outcomes worth achieving, and they reflect years of strategic patience paying off in a very loud way. But the weapons winning this fight have to be built back. The carrier strike groups absorbing these deployment lengths will need time the calendar can't compress. The supply chains that were supposed to have been fixed are showing the same structural gaps the Pentagon was flagging before any tariff went up. Economic nationalists — and I count myself among them on the underlying argument — should be asking a simple question right now: did we build what we said we were building? Not in the aggregate, not in the brochure, but in the subtier supplier who can actually surge solid rocket motor output in a crisis? If the answer is yes, let's see the data. If the answer is no, let's stop pretending the tariff schedule was ever going to close that gap by itself. Conservatism at its best isn't about defending policy choices after the fact. It's about demanding that the policies actually work.