The report, composed by a bipartisan National Defense Strategy Commission selected by Congress, suggests that a likely US military campaign against the Russian military in Northern Europe or with China over the island of Taiwan would yield "enormous" losses of both military personnel and "capital assets" (ships, aircraft, and other vehicles) for the United States.
"America's military superiority - the hard-power backbone of its global influence and national security - has eroded to a unsafe degree", the commission said.
"The US military could suffer unacceptably high casualties and loss of major capital assets in its next conflict", the commission found.
The commission was established by Congress in 2017 to evaluate the National Defense Strategy of the USA administration of President Donald Trump.
The report also called for the United States to become more competitive in cyberspace, where portions of the next war could be fought.
The panel said that despite an annual budget of some $716 billion - at least 10 times that of Russian Federation and four times the size of China's - USA defense development is under-resourced considering today's threats.
"It is beyond the scope of our work to identify the exact dollar amount required to fully fund the military's needs", the report concluded.
"The Commission assesses unequivocally that the NDS is not adequately resourced", the report says, while adding that "available resources are clearly insufficient to fulfill the strategy's ambitious goals, including that of ensuring that DOD can defeat a major power adversary while deterring other enemies simultaneously".
The warning comes as the Trump administration is weighing a possible cut to the defense budget following a major boost in fiscal years 2018 and 2019.
Money saved from planned Pentagon reforms will prove insufficient to see through the kind of investment the military needs to see through the new national defence strategy, the commission found.
In its recommendations, the report advocated seeing through the modernisation of the U.S. nuclear arsenal and putting a top Pentagon official in charge of developing additional air and missile defences.
It described current Pentagon acquisition programmes as too risk-averse, and urged the Defence Department and Congress to create a new category of pilot programmes aimed at "leap-ahead" technologies that could serve as breakthroughs to help retain American military dominance.
In his almost two years as secretary, Mattis has relied more on current and former military officers for expertise than his recent predecessors have.