The Iran conflict has confirmed a shift in the economics of war toward cheaper, mass-produced weapons, forcing a wholesale rethink of military purchases, according to a recent report.
While the U.S. and Israel have decimated Iran’s military, the Islamic Republic still has enough fighting power to inflict meaningful economic and material damage, Alpine Macro chief innovation strategist Noah Ramos said in a note earlier this month.
In particular, the regime has used its Shahed drones, which cost only $20,000-50,000, forcing the US and its allies to spend $4 million on PAC-3 missiles or THAAD interceptors at $12 million-$15 million.
“Despite interception rates above 90%, the value of asset protection has declined due to obscene economics,” Ramos wrote. “This imbalance has haunted Western military planners since the early days of Russia’s invasion of Ukraine.”
He explained that such unilateral attrition is contrary to the West’s model of precision lethality and is a deliberate part of Iran’s strategy: heavy casualties are not a flaw, because even the most advanced defenses can be sufficiently overwhelmed.
Cost disparities are exacerbated by severe production and supply-chain disruptions. For example, no new THAAD interceptors have been delivered since August 2023, and the next batch is due in April 2027.
At the same time, the US rapidly drew down its stockpile of the most expensive weapons during the Iran war. The Center for Strategic and International Studies deployed 45% of its precision strike missiles, 50% of its THAAD interceptors, and about half the number of PAC-3 missiles. CSIS estimates that it will take one to four years to restore the seven major weapons to prewar levels.
“Dwindling weapons stockpiles pose near-term risks,” the report said. “A war against a capable peer competitor like China would consume weapons at a much greater rate than this war. Prewar innovations were already inadequate; today’s levels will constrain American actions should a future conflict arise.”
Indeed, Alpine Macro’s Ramos pointed out that many critical components for a variety of US weapons are deeply intertwined in Chinese supply chains.
These include the Stealthy Joint Air-to-Surface Standoff Missile, the Tomahawk Cruise Missile, the Long-Range Anti-Ship Missile, and the Joint Direct Attack Munition Guide Kit.
The U.S. military’s reliance on Chinese suppliers “poses a serious threat due to geopolitical divisions or conflict over Taiwan,” Ramos warned.
