I’m trying to understand whether the US dollars reserve currency role affects military supply chains through similar mechanisms as civilian ones.
In civilian manufacturing, a structurally strong dollar can make imports cheaper and exports less competitive, incentivizing offshoring and globalized supply chains optimized for cost and financial efficiency rather than resilience.
My question is whether military and defense supply chains are insulated from these forces, or whether they are ultimately shaped by the same macroeconomic incentives of exchange rates, capital flows, and financialization, just with added procurement rules and security constraints.
Put differently, does reserve currency status indirectly discourage domestic defense manufacturing capacity over time? Or are defense supply chains sufficiently policy driven that dollar strength and capital account dynamics are largely irrelevant?
I’m not asking whether the US can produce domestically in wartime, but whether the peacetime structure and incentives facing defense production differ meaningfully from civilian industry at the macro level.
Are military supply chains affected by the dollars reserve currency status in the same way civilian supply chains are?
byu/GoldThenCrypto inAskEconomics
Posted by GoldThenCrypto