Speaking in Washington to launch the review, US Defense Secretary Jim Mattis accused Tehran and Pyongyang of destabilizing their respective regions by pursuing nuclear weapons or sponsoring terrorism.
Defence Secretary Jim Mattis said while the United States will continue to fight terrorism, "great power competition - not terrorism - is now the primary focus of USA national security".
The document also listed North Korea among the Pentagon's priorities, citing the need to focus USA missile defences against the threat from Pyongyang, which beyond its nuclear weapons has also amassed an arsenal of biological, chemical, and conventional arms.
Mattis' strategy also calls for greater coordination with allies, who Trump on the campaign trail lambasted for not doing enough to share the burden of defending the post-World War II order.
The Trump administration released its "America First" security strategy in December, which called for "u$3 nleashing these abundant energy resources- coal, natural gas, petroleum, renewables, and nuclear" to boost the economy and aid US allies.
One of the central themes is that the United States faces formidable military competitors like China and Russian Federation.
Mattis also said the Pentagon will "modernize key capabilities, recognizing we can not expect success fighting tomorrow's conflicts with yesterday's weapons or equipment". "As hard as the last 16 years have been, no enemy has harmed the United States military more than defence spending caps and sequestration".
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If enemies know we are weak today but will be strong tomorrow, they have every incentive to strike sooner rather than later.
The third line of effort, he said, will be the foundation for the USA competitive edge: reforming the business practices of the department. To get there will require a redoubled commitment to the military by Congress through stable, sustained, and sufficient defense funding.
American military forces are emerging from a period of "atrophy" that has resulted in the eroding of military advantages over adversaries, the 11-page strategy report says. But it is not clear whether the actual budget addresses those more directly rather than enlarging USA potential for involving itself in more disputes with low-tech enemies. "I think that there is a lot to do with the recognition that we are each other's huge trading partners", he said on Friday afternoon at a conference call organized by the Atlantic Council.
"Let me be clear, as hard as the last 16 years have been on our military, no enemy in the field has done more to harm the readiness of the US military than the combined impact" of spending cuts and lack of long-term funding, he said.
The unclassified summary of the strategy defines Iran as the "most significant challenge to Middle East stability" by using terrorism, proxy militias and arms to create an "arc of influence and instability while vying for regional hegemony". USA defense officials say these countries are destabilizing their respective regions.
If the government shuts down, the military is considered essential and would still report for duty, U.S. officials have said.
"We need a budget and budget predictability if we are to sustain our military", he urged.
The unclassified, 11-page document lays out a variety of ways the U.S. military can prepare to meet what it sees as these emerging threats by ramping up a strategic approach, alliance building and revamping the department's acquisition processes.