A report by UK consultancy WTW identifies ongoing tariff wars and dependence on China as two top emerging risks for the global defence sector. It warns that the defence sector's reliance on Chinese materials and components, particularly rare earths and electronics, presents significant supply chain vulnerability amid geopolitical risks. The findings are based on interviews with five industry executives from Australia, Europe, and North America.
The report, titled “Managing the new economic risks in the defence sector,” was released on Wednesday by Oxford Analytica and Willis, an arm of WTW. It is based on interviews with an international panel of five industry executives from Australia, Europe, and North America, though their names are not featured.
WTW stated: “The defence sector’s reliance on Chinese materials and components, particularly rare earths and electronics, is presenting significant supply chain vulnerability amid geopolitical risks.” The tariff war between China and the United States is disrupting supply chains and raising costs, making it a key concern for the defence industry going forward.
The findings raise concerns that China could feel targeted by geopolitical lockdown measures in other tariff deals, such as export control alignment and transshipment restrictions, and retaliate by withholding critical minerals and other key supplies, which would have huge implications for the defence industry.
The report highlights how geopolitical tensions and supply chain exposure are reshaping risk calculations for military manufacturers. Keywords include South China Sea, tariff wars, Ukraine, WTW, Russia, Asia, tariff dispute, China, Oxford Analytica, Beijing, Chinese materials, Europe, defence sector, Australia, and rare earths.