A senior member of the Senate Armed Services and Appropriations Committees has raised concerns that the Trump administration’s widespread tariffs policy will lead to a spike in defense acquisition costs and negatively impact the industrial base.
Sen. Jeanne Shaheen (D-N.H.), who is also the top Democrat on the Foreign Relations Committee, sent a letter to Defense Secretary Pete Hegseth on Wednesday seeking details on how the Pentagon is factoring in the costs of Trump’s “trade war,” which she said is “harming DoD’s purchasing power, weakening supply chains and raising costs on small businesses.”
“In the short term, the announced tariffs alone will increase costs for U.S. defense industrial supply chain companies. [Defense industrial base] companies and their suppliers may be forced to absorb those costs which could drive more companies and jobs out of the defense industrial supply chain, stifling innovation. In the long term, tariffs will drive up DoD’s contracting and procurement costs, limit DoD buying power and ultimately harm the warfighter and our military readiness,” Shaheen wrote.
The Trump administration is currently imposing a “blanket” 10 percent tariff on all imports, a 25 percent tariff on steel and aluminum imports and a 145 percent tariff on all imports from China. The White House also previously announced a slate of larger “reciprocal” tariffs, and then placed a 90-pause day on that policy for all countries except China.
Acting Assistant Secretary of the Navy for Research, Development, and Acquisition Brett Seidle told the Senate Armed Services Committee last month the steel and aluminum tariffs could increase shipbuilding costs, noting that “about half of our aluminum and a third of our steel in [2023] came from Canada” (Defense Daily, March 27).
Shaheen, in her letter to Hegseth, also raises concern about DoD’s ability to “secure its own supply chains and fully assess how much of its industrial base is foreign-sourced” amid the tariffs agenda.
“The average American aerospace company relies on roughly 200 first tier suppliers. The second and third tiers have more than 12,000 companies. With the globalization of supply chains, these suppliers and their goods come from a wide array of places,” Shaheen said.
Along with “pressing budgetary pressures” the Pentagon may face in the coming years, Shaheen adds that the added impact of tariffs “have the potential to balloon the budget far beyond [the Congressional Budget Office’s expected increases.”
Shaheen has asked Hegseth to respond with specific information on the expected tariffs impact, to include listing “critical imported supplies” that are now subject to new tariffs, the expected “monetary impact” on DoD contracts, how the Pentagon is factoring in increased costs into fixed-price contracts and how DoD’s purchasing power could be affected.
The letter also asked Hegseth to provide clarity on whether industry can use Chapter 98 of the Harmonized Tariff Schedule to purchase certain critical materials without the imposed duties.
“Providing clarity on this front would help businesses throughout the defense supply chain,” Shaheen said.