The ‘Peace Broker’ in Combat Boots

The President of the United States of America, which accounted for 43 per cent of global weapons exports between 2020 and 2024—more than four times the share of France, the world’s second-largest exporter—is trying to create a new image by promoting ‘trade for peace’. Though it made a failed attempt to broker peace between Russia and Ukraine, the US President successfully negotiated a ceasefire between India and Pakistan on May 10. It has been reported that in a court submission, the Trump Administration claimed that the ceasefire between India and Pakistan, following India’s Operation Sindoor, was “only achieved” after US President Donald Trump stepped in and offered both countries trading access to the US in order to “avert a full-scale war.” Interestingly, as part of the new round of tariff negotiations with Japan and Korea, Trump was calling on Japan and Korea to pay for stationing US troops. Though Tokyo and Seoul seek to keep security and trade talks separate, the huge cost of maintaining tens of thousands of US troops stationed in South Korea and Japan was included in President Donald Trump’s tariff negotiations. The US maintains around 750 overseas military bases in about 80 countries, spending trillions of dollars.

It may be recalled that to ‘Make America Great Again’, President Trump initiated a fierce trade war with America’s trading partners to reduce its widening trade deficits. Between January and April 2025, the average effective US tariff rate rose from 2.5 per cent to an estimated 27 per cent—the highest level in over a century. On April 2—a day he called “Liberation Day”—Trump announced a minimum 10 per cent tariff on all US imports, effective April 5, and higher tariffs on imports from 57 countries. Higher “reciprocal tariffs”, ranging from 11 per cent to 50 per cent, were meant to take effect from April 9. But the new tariff rates were suspended for 90 days, during which period the US expects to enter into Bilateral Trade Agreements (BTA) with its major trading partners, including India. As no major breakthroughs, except a minor deal with the UK, have been reported so far, it appears the Trump Administration is now clubbing tariff negotiations with security deals. During tariff negotiations, the Trump Administration suggested that Japan and Korea pay for stationing US troops. Reacting to this news, the noted economist Jeffrey D. Sachs observes that though the US claims that its bases in East Asia are defensive, they are understandably viewed by China and North Korea as a direct threat. Citing historical records, he emphasises that during the past 1,000 years—during which time China was the region’s dominant power for all but the last 150 years—China did not attempt to invade Japan on a single occasion. When the Mongols temporarily ruled China between 1271 and 1368, they twice sent expeditionary fleets to invade Japan, and both times were defeated by a combination of typhoons and Japanese coastal defences.

Japan, on the other hand, made several attempts to attack or conquer China. In 1592, the arrogant and erratic Japanese military leader launched an invasion of Korea with the goal of conquering Ming China. In 1894–95, Japan invaded and defeated China in the Sino-Japanese War, taking Taiwan as a Japanese colony. In 1931, Japan invaded northeast China (Manchuria) and created the Japanese colony of Manchukuo. In 1937, Japan invaded China, starting World War II in the Pacific region. Nobody thinks that Japan is going to invade China today, and there is no rhyme, reason, or historical precedent to believe that China is going to invade Japan. Japan has no need for the US military bases to protect itself from China. The US military bases in East Asia are really for the US projection of power, not for the defence of Japan or Korea, writes Sachs. In addition to putting pressure on India (and Pakistan) for an early trade agreement, the other possible reason for the US involvement in the ‘ceasefire’ negotiation between the two South Asian neighbours might be the total marginalisation of the world’s largest military supplier in the fifth war, since 1947, between India and Pakistan. During this ‘new tech war,’ where Chinese and French fighter jets fought to establish their dominance, US fighter jets were absent. At the peak of India and Pakistan’s current tensions, a CNN report predicted that for China, this conflict “could be its first major test,” to showcase to the world how “Chinese military technology performs against proven Western hardware.” The US desperately wanted to stop this battle, where its competitors were hogging the limelight.

Significantly, on May 2, the White House unveiled a budget blueprint for 2026 that would pump more money into defence and homeland security, while taking an axe to programmes including education, foreign aid, environment, health, and public assistance programmes, reports CNN. President Donald Trump requested a record USD 1.01 trillion in national security spending for the fiscal year beginning October 1, more than 13 per cent over the current year’s figure. The defence budget will fund the Golden Dome missile defence project, shipbuilding and nuclear modernisation, and border security among its top priorities. It also includes a 3.8 per cent military pay raise. US President Donald Trump again stirred controversy on May 28 by telling Canada it must pay USD 61 billion to be part of his proposed “Golden Dome” missile defence system—unless it chooses to become the 51st state of the United States!

Military-Industrial Complex: An Integral Part of the US Economy

As the world’s largest defence spender, the US accounted for 37 per cent of global military spending. In 2024, the United States spent USD 997 billion on defence, which is more than the next nine countries’ spending combined. In comparison, China, the second biggest defence spender, spent USD 314 billion on military expenditures. According to SIPRI data, in 2024, the combined military expenditure of China, Russia, Germany, India, the UK, Saudi Arabia, Ukraine, France, and Japan amounted to USD 984 billion—lower than the US’s expenditure of USD 997 billion. Currently, around 3.4 per cent of the US’ GDP is spent on defence.

In 2023, while China accounted for 29 per cent of the global value of manufacturing output, the US’ share was only 17 per cent. Nonetheless, the US is the largest supplier to the global arms market, with a global share of 43 per cent—indicating the importance of the armament industry in the US economy. In 2010, China overtook the United States to become the world’s largest manufacturer. Over a decade later, the gap has only widened. In 2023, China’s manufacturing sector added USD 4.8 trillion in value—making up 27 per cent of the country’s total economic output. By contrast, the US’ manufacturing sector added only USD 2.8 trillion in value, accounting for just over 10 per cent of the US economy, making it the least reliant on manufacturing among the world’s top 10 industrial nations. During 2020–24, the USA supplied major arms to 107 countries. Its arms exports grew by 21 per cent between 2015–19 and 2020–24, with its share of global arms exports rising from 35 per cent to 43 per cent during the said period. The sale of United States military equipment to foreign governments in 2024 surged 29 per cent to a record USD 318.7 billion, the US State Department said—a figure that includes the sale of jet fighters worth USD 18.8 billion to Israel, despite the country facing allegations of genocide in Gaza. In FY 2024, the total value of transferred defence articles and services and security cooperation activities conducted under the Foreign Military Sales system was USD 117.9 billion. This represents a 45.7 per cent increase, up from USD 80.9 billion in FY 2023. The total authorised value for privately contracted Direct Commercial Sales (DCS) for FY 2024 was USD 200.8 billion, which includes the value of hardware, services, and technical data authorised for exports, temporary imports, re-exports, regtransfers, and brokering. This represents a 27.5 per cent increase, up from USD 157.5 billion in FY 2023. Out of the total US exports valued at USD 2.06 trillion, military exports accounted for 15.4 per cent.

According to the Stockholm International Peace Research Institute (SIPRI), in 2023, Lockheed Martin, RTX Corporation, Northrop Grumman Corp., Boeing, and General Dynamics were the world’s biggest arms-producing and military services companies. Nine of the world’s top 20 defence firms by revenue were American, and 41 US firms featured in the SIPRI list of the world’s 100 biggest defence companies by revenue. In 2025, the valuations of major defence contractors have surged to record levels due to ongoing armed conflicts and rising tensions across the globe. Out of a list of the 44 biggest defence companies, based on May 20, 2025 market capitalisations prepared by Visual Capitalist, 16 are located in the USA., while 17 are based in Europe. Though no Chinese defence firm features in the list, 2 Indian companies are included. American companies account for over half of the total market capitalisation (USD 743 billion vs. USD 1.3 trillion) of the 44 firms. The most valuable company on the list is RTX (USA), which was formed in 2020 through the merger of Raytheon Company and United Technologies Corporation. The next biggest defence company is Honeywell (USA), which is a diversified manufacturing company. In October 2024, Honeywell was awarded a USD 103 million contract by the US Army to develop a next-gen radar system. The third name on the list is France’s Safran, the most valuable defence company outside the United States. Safran specialises in aircraft engines and components, as well as advanced navigation systems. However, defence experts are warning that the US defence industry, dominated by a handful of massive contractors, has become too bloated—stifling innovation and driving up costs for military platforms.

In a detailed report titled The Tech Revolution and Irregular Warfare: Leveraging Commercial Innovation for Great Power Competition (January 2025), the Centre for Strategic and International Studies cautioned the US administration, saying that US adversaries are developing capabilities and taking actions that pose a growing threat to the US military and intelligence community across the globe. The US government has not adequately leveraged the commercial sector to conduct irregular warfare against China, Russia, Iran, and other competitors due to significant risk aversion, slow and burdensome contracting and acquisitions processes, and a failure to adequately understand technological advances. There is an urgent need to rethink how the United States works with the commercial sector in such areas as battlefield awareness, placement and access, next-generation intelligence, unmanned and autonomous systems, influence operations, and precision effects, the report highlights.

Genesis of US Military Industry

Even a hundred years ago, the United States did not have a defence industry, wrote Loren Thompson (2023) in Forbes. Companies like DuPont and Bethlehem Steel, which had benefited handsomely from selling to America’s military and European allies during World War One, had returned to peacetime pursuits. The War Department had demobilised from nine million personnel at the beginning of 1919 to a mere 397,000 in 1923. World War Two was conducted on much the same model, with private industry mobilising to become the “arsenal of democracy” until Axis powers were defeated. The war ended on August 15, 1945, and by the end of the year, 70,000 Boeing workers, 99,000 Douglas Aircraft workers, and 86,000 North American Aircraft workers had lost their jobs. But Russia’s testing of a fission weapon in 1949, a fusion (thermonuclear) weapon in 1953, and an intercontinental ballistic missile in 1957 changed America’s war plans. For the first time in its history, the United States faced a chronic peacetime threat to its survival. Defence spending during the Eisenhower years (1953–1960) climbed to over half of the federal budget, averaging nearly ten per cent of the entire economy. It was this unprecedented level of peacetime military outlays that made possible the existence of a dedicated private-sector defence industry—an industry that had grown so big by the time Eisenhower left office that the departing president cautioned against its potential “unwarranted influence” within the government. Thus, the US military-industrial complex (MIC) was established.

Incomplete statistics indicate that from the end of World War II to 2001, among the 248 armed conflicts that occurred in 153 regions of the world, 201 (81 per cent) were initiated by the United States. During the last two decades, the US war strategy has undergone a major change, primarily driven by the “war on terror” following the September 11, 2001 attacks. This involvement extends beyond conventional warfare, including drone strikes and special operations in countries like Afghanistan, Iraq, Syria, Yemen, and Somalia.

Observations

Recently, Pakistan’s Defence Minister Khawaja Asif blamed the United States for intentionally fuelling global conflicts to benefit its arms industry. The last hundred years of war history corroborate his observation. Global brands owned by US corporations, like iPhones, are not manufactured in the USA because of higher manufacturing costs. To remain globally competitive, these US firms are not going to relocate their manufacturing base to the USA. A tariff war will not help President Trump revive US manufacturing.

Though the Court of International Trade’s judgment against Trump’s tariffs under the International Emergency Economic Powers Act remains suspended due to an emergency stay, if subsequent court rulings also uphold the strike-down of tariffs, it is reported that US government officials have indicated they would follow other measures to continue the tariff war initiated by President Trump. Media reports suggest officials are exploring the implementation of broad-based tariffs across international markets using an unprecedented section of the Trade Act of 1974, which permits levies of up to 15 per cent for 150 days to address trade deficits with international partners, according to sources quoted in the report. The second approach involves a detailed notification and consultation process, which administration officials believe provides stronger legal standing compared to the recently invalidated tariff policy. This alternative method has precedent, having been employed multiple times previously, including during Trump’s initial China tariffs. The Smoot-Hawley Tariff Act of 1930 enables the imposition of tariffs against nations engaging in discriminatory practices against the US. There is also provision for expanding tariffs based on national security considerations. There is a high possibility that the much-hyped ‘tariff war’ will lead to a military war on a global scale. It appears President Trump is preparing for WW3.

The writer is a professor of Business Administration who primarily writes on political economy, global trade, and sustainable development.
Views expressed are personal