The long-running saga of the supply of U.S. Patriot air defense missiles has taken another turn for the worse this week, after fresh reports of a depletion of stocks down to “beyond critical” levels in Europe.
President Donald Trump‘s war with Iran—now six months old—is to blame. It is, we should say, a characterization the Pentagon and a senior NATO spokesman reject. Though the latest report from The Associated Press is not the first and surely won’t be the last.
Behind the argument about the readiness of America and its allies to meet the threats posed by the Western world’s various foes sits a second question, one asked of the Trump administration’s flagship industrial strategy.
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How fast can the economics of “America First” turn depletion into factory capacity—and can it move fast enough to matter?
According to AP, Patriot inventories fell after American stocks in Europe were shifted toward the Middle East, and the Iran conflict has consumed roughly 1,500 of an estimated prewar inventory of 2,330 interceptors. That is about 65 percent, on Center for Strategic and International Studies (CSIS) figures.
The economics start with demand the government itself creates.
Missile expenditure naturally generates a replenishment requirement. Washington is trying to make that requirement predictable enough for manufacturers and their suppliers to commit capital to new capacity, so it can keep a ready supply of these vital missiles.
The Army describes long-term PAC-3 MSE purchasing in exactly those terms. Defending the nation starts at home, even if it is conducted through wars abroad. So too does America First economics.
Camden Turns Missile Demand Into Factory Demand
For the transmission, look at Camden, Arkansas.
Lockheed Martin says the city hosts final all-up-round production of its PAC-3 Missile Segment Enhancement interceptor.
Expansion of production will lift employment there from about 1,200 to 1,850, part of $8 billion to $9 billion Lockheed is investing through 2030 across 20-plus U.S. facilities.
On July 29, the Army replaced a one-year contract action with a seven-year arrangement covering fiscal 2026-2032 PAC-3 MSE procurement.
It raised the not-to-exceed ceiling to $58.62 billion so contractors could “hire skilled labor, secure raw materials, and invest in advanced manufacturing facilities.”
But the ceiling is not yet money spent, so don’t bank it for American industry. No funds were obligated, the arrangement remains undefinitized, and the only firm money is April’s $4.7 billion year-one award.
CSIS also notes the 2,000-a-year surge rate is achievable “with existing tooling and facilities.” If that’s so, the constraint lies in funded orders and sub-tier suppliers rather than more buildings.
The Buildup Started Before the Iran war
On January 6, 2026, nearly two months before U.S. Central Command opened Operation Epic Fury on February 28, Lockheed and the Department of War announced a new framework agreement.
It is designed to lift annual PAC-3 MSE capacity from about 600 interceptors to 2,000. By comparison, the company delivered 620 in 2025.
The framework was also structured to “preserve initial cash neutrality,” letting Lockheed invest without fronting the money. Put simply, it is government demand underwriting private capacity.
The Iran war has turned that drive to increase Patriot production into a much more urgent replenishment problem.
On June 11, Trump invoked Section 708 of the Defense Production Act, which lets the Pentagon organize production agreements among competitors without antitrust exposure.
Two weeks later, the White House asked Congress for $87.6 billion in supplemental funding, including $21 billion for munitions and the industrial base, none earmarked for Patriots.
Then, in an August 5 memo, Deputy Defense Secretary Steve Feinberg gave defense companies 21 days to propose faster schedules or higher output, writing that “yearslong development cycles are not acceptable.”
Those responses came due this week. Trump’s war has supplied a new and much more pressing argument for a policy already under way.
Washington Is Also Trying to Redirect the Profits
An America First rearmament raises an obvious question: who captures the money?
Trump has an answer and it isn’t shareholders. In January, he signed an executive order barring major defense contractors from buying back stock or paying dividends at the expense of accelerated procurement and higher production capacity.
The premise is seen in a 2023 Pentagon review, which found that from 2009 to 2019, as profits rose, contractors cut the revenue share going to research and capital expenditure—while the buyback share grew from 3.7 percent to 6.4 percent.
Industry, of course, is fighting back against this remedy.
As Congress weighs writing the order into law, the Aerospace Industries Association argues that restricting shareholder payouts would weaken the very industrial base lawmakers want to grow, by deterring investment and new entrants.
The fight clarifies the shape of America First economics here: the policy pairs larger domestic defense orders with state pressure over how contractors deploy the resulting capital.
This isn’t the free market of yesteryear. It’s the Trump era now.
But capital that cannot be returned is harder to raise. Why would investors want to invest, if one of the more reliable avenues of financial return is closed off to them?
It is an awkward trade-off for America First economics that is more costly than the populist money-grubbing caricature of stock buybacks implies.
America First Still Has an Allied Supply Chain
There is a second, more obvious complication to Trump’s America First economics.
Lockheed is developing PAC-3 MSE component production in Spain, where two firms are building lines for specialized cables, harnesses and actuators that will eventually feed the Camden final assembly line. America First, with foreign help.
The arrangement predates Trump’s second term, when he has aggressively sought to force the reshoring of manufacturing to the U.S. Lockheed’s Spanish subsidiary has worked with both since 2023.
But the pattern is widening. At July’s NATO summit, Trump said the U.S. would license Patriot production abroad.
Executive Order 14415 anticipates as much, saying critical materials and components should be sourced “domestically or from allied nations.”
The order defines the preferred supply chain as an American-led allied bloc. That’s a little different from the sharper edges of Trump’s America First rhetoric.
Factory Gains Come With Fiscal and Political Costs
Visible investment in Camden says little about the net effect on the national economy.
Robert Barro and Charles Redlick, using long-run U.S. data including wartime buildups, estimated defense-spending multipliers well below one, implying that military purchases crowd out other components of GDP, chiefly private investment.
Their estimates are contested and historical rather than predictive, but they capture the “broken window” objection to treating replacement weapons as new wealth.
Senator Patty Murray, a Democrat, argued that war spending competes with “health care, housing, or child care.”
And Murray noted that the Pentagon already sits on more than $100 billion in unspent reconciliation funding—which, if accurate, suggests appropriations may not be the binding constraint.
House Appropriations Chairman Tom Cole and defense subcommittee Chairman Ken Calvert, both Republicans, countered that Congress must “replenish critical munitions, sustain readiness.”
The Shortage Is Already Setting Policy
The shortage has already changed American behavior. The New York Times and Wall Street Journal reported that the White House called off planned strikes on Iran over depleted interceptor stocks.
Moreover, CNN reported that Defense Secretary Pete Hegseth had a final go-ahead before Trump reversed course, after General Dan Caine, the Joint Chiefs chairman, warned that major operations would dangerously deplete Central Command’s interceptors.
Trump still says the U.S. holds massive quantities of munitions, playing down concerns.
Industrial capacity has clearly become an input to targeting decisions. And the lag is long.
Mark Cancian, the CSIS analyst behind the most-cited estimates, put it plainly: “What we’re getting now are missiles that were funded in 2023.”
A July analysis put Patriot stocks under 1,000 and warned of near-term risk to U.S. readiness in a Western Pacific conflict.
What Comes Next for the Patriot Build-Up
Congress returns in September with the supplemental unpassed.
U.S. Patriot buys have averaged about 225 missiles a year over the past decade, against roughly 1,500 expended in six months.
Output runs near 650 a year, about half going to allies and partners whose orders compete for new capacity. Lockheed is aiming at 2,000. The Army’s fiscal 2027 request seeks 3,203.
Faster appropriations and rising output would vindicate the industrial half of the America First calculation; delays would leave the readiness gap open.
Can the economics of America First turn a seven-year demand signal into missiles fast enough to solve a problem measured in weeks, using a supply chain that U.S. policy itself expects allies to help build?
Let’s hope the missiles arrive before the next crisis that needs them, be it in Europe, the Middle East, or the Pacific.