War's Unseen Boost to Economic Growth

By Elke Porter | WBN News Global | April 21, 2025

In recent times, the relationship between warfare and economic growth has been scrutinized, often highlighting a sometimes uncomfortable reality: war can generate significant financial gains for certain sectors. As tensions persist globally, particularly highlighted by the ongoing conflict in Ukraine, a closer look at the financial implications reveals a complex landscape where some entities thrive amidst chaos. Follow the money trail, as they say.

U.S. Military Presence and Strategic Spending

Despite reducing the number of troops stationed in Europe from a peak of 105,000 in 2022 to approximately 80,000 today, U.S. defence spending remains robust. This military footprint, aimed at ensuring rapid response and strengthening NATO alliances, serves dual functions: it maintains national security and acts as an economic stimulus. Permanent bases in Europe prove more cost-effective than rotating troops, saving around $70 million annually while benefiting local economies through established infrastructure.

Defence Spending Fuels Growth

Congress has allocated substantial aid to Ukraine (approximately $170 billion), with over $120 billion flowing back into U.S. defence contractors. This not only sustains military operations but also boosts American firms involved in defence manufacturing. Such firms are witnessing significant gains through long-term contracts and increased production orders, supporting job creation in a sector that remains pivotal to the economy.

On April 8th, President Donald Trump unveiled plans for a $1 trillion defense budget next year, a massive increase that he claimed will provide the country with unmatched military strength for years to come. Trump said the extra money for defence will allow the country to purchase new equipment and capabilities needed for the future. Kaching.

“We’ve never had the kind of aircraft, the kind of missiles, anything that we have ordered,” he said. “And it’s in many ways too bad that we have to do it because, hopefully, we’re not going to have to use it.”

Supply Chain and Economic Ripple Effects

European nations, striving to replenish their depleted arsenals, look to U.S. firms, creating a surge in demand for American-made munitions and military equipment. The ongoing acquisition by European countries of U.S. weaponry not only fuels defence contractor profits but also enhances related industries such as logistics and technology, generating a broad economic impact.

In recent years, the 27 EU nations have placed about two-thirds of their orders with U.S. defence companies. But thanks to the ongoing tariff war, to qualify for new loans, they will now have to buy at least 65% of equipment from suppliers in the EU, Norway or Ukraine. This is under the newly revealed “Readiness 2030” security strategy with a drive to break its security dependency on the United States, and a focus on buying more defence equipment in Europe.

Tariffs and Domestic Profitability

Recent tariffs imposed on imported steel and aluminum have further altered the defence landscape, shielding U.S. manufacturers from foreign competition while elevating domestic prices. Consequently, as military demand escalates, American steel suppliers enjoy heightened profits, balancing the higher input costs faced by other industries.

Canada's Integral Role

Canada remains crucial within the North American defence supply chain, producing essential military components and materials. Despite challenges posed by tariffs, Canada’s defence apparatus continues to collaborate closely with the U.S., ensuring that cross-border production and logistical support thrive.

Despite the challenges posed by recent tariffs, the defense relationship between the United States and Canada remains steadfast and collaborative. Both nations continue to prioritize joint security initiatives, exemplified through partnerships like the North American Aerospace Defence Command (NORAD), where they share intelligence and resources to protect North American airspace. Tariffs on materials such as steel and aluminum have created some tension, yet they have not impeded the ongoing collaboration in defence production and procurement.

Canadian companies play a vital role, often working directly with U.S. defence contractors. This relationship demonstrates that, while tariffs may impact certain economic interactions, the strategic importance of defence cooperation fosters resilience. Joint military exercises, cross-border training missions, and collaborative research and development projects continue to thrive, highlighting a shared commitment to mutual security. Ultimately, the U.S.-Canada partnership in defence endures, illustrating that the ties built on security needs can transcend economic barriers.

Economic Winners and the Future Landscape

War-induced spending inevitably stimulates sectors like defence, energy, and manufacturing, propelling job growth and investment returns in related industries. However, this economic phenomenon raises questions about sustainability and the potential for a graceful exit from ongoing conflicts. As negotiations for peace remain elusive, the cycle of aid and production persists, with U.S. industries poised to capitalize on continued volatility.

In conclusion, the complex relationship between war and economic growth illustrates that while certain sectors flourish, the broader implications for peace and security remain paramount. The question of who truly benefits from these circumstances prompts critical reflection on our priorities and the future economic landscape.

Bottom Line: War has reshaped the global defence economy. While aid flows outward, much of the money stays in the U.S., boosting industries, protecting domestic production, and creating jobs. The economic winners include defence contractors, steel manufacturers, and supply chain partners in North America. As long as the demand continues, so will the profits.

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Connect with Elke at Westcoast German Media or on LinkedIn: Elke Porter or contact her on WhatsApp:  +1 604 828 8788