Why Trump Means Good Times For Europe’s Arms-Makers
Owen Li
2025-01-21The industry anticipates that no matter what the new U.S. president does, it stands to make a lot of money.
Much of Europe is anxious about Donald Trump’s return to the White House, but there’s little to suggest the continent’s arms manufacturers expect a crisis.
Europe is seeing a dramatic boost in defense budgets, driven by both long-standing pressure from Washington and the continent’s own reaction to Russia’s full-scale invasion of Ukraine. That promises a glut of military contracts for weapons-makers in Europe as well as in the U.S., South Korea and elsewhere.
That also explains why the industry is relatively relaxed about Trump.
If he pulls the U.S. out of NATO and leaves Europe to go it alone, the continent will have to rely on its own arms companies, netting them a surge of contracts.
But even if the new president doesn’t do anything so radical, the enormous scale of new defense spending — the European Commission estimates that the bloc’s members will need to spend €500 billion on defense over the next decade — still means there will be a lot of money available for European defense firms.
That said, the early winner of Europe’s defense buildup is likely to be the U.S.
“The European defense industry cannot cover it all, particularly after decades of underinvestment that have seriously undermined Europe’s defense industrial capacities,” said Jan Pie, secretary-general of Brussels-based defense industry lobby ASD. "This trend must be reversed. Buying non-European ultimately means that European industry will continue struggle to get a return on its investments will over time lose its technological know-how and related skills."
Roughly 55 percent of Europe’s arms imports from 2019 to 2023 were from America, sharply up on 35 percent over the preceding five years, according to the Stockholm International Peace Research Institute (SIPRI).
“In terms of deliveries, the actual volume of weapons transferred from the U.S. to European states is ... planned to increase significantly in the coming years,” said Pieter Wezeman, a senior researcher at SIPRI, adding that those deals had “nothing to do with Trump” but rather with the scramble for gear following Russia’s invasion of Ukraine.
That trend could shift even more in America’s favor if countries attempt to curry favor with Trump by placing more contracts with U.S. companies.
“We don’t know much of Trump’s intentions, but I wouldn’t be surprised if countries, especially in the east, will buy more and more American stuff,” a European diplomat said.
Doubts remain, however — mostly regarding how Trump will act.
“Deterrence is a mind game, it’s not a weapons game,” said Christian Mölling, who tracks defense procurement for the Bertelsmann Foundation. “I’m questioning the underlining assumption that you can buy yourself American leadership through weapons deals.”
For now, American companies are doing well, selling Lockheed Martin F-35A Lightning II fighters, AH-64 Apache helicopters, Patriot air defense system, Abrams tanks and more to countries across the continent.
But EU nations that are modernizing their militaries, such as Poland and Romania, also procure from European arms-makers, and that’s unlikely to end soon, no matter what Trump does.
Poland last year spent €1.5 billion on thousands of Carl Gustaf M4 recoilless rifles and hundreds of thousands of rounds of ammunition from Sweden, while in 2023 it bought Saab 340 early warning and control aircraft.
Warsaw is also mulling buying Eurofighter Typhoons, manufactured by a consortium of Airbus, BAE Systems and Leonardo, within its continued air force modernization.
Romania is buying Mistral 3 air defense missiles from France.
Other European countries show similar patterns. Some 15 European countries are on track to buy F-35As, but the Eurofighter Typhoon is looking at new sales to Germany, Italy and Spain. Saab is also continuing to push its JAS 39 Gripen fighter, last year selling four to Hungary.
The early signal from Trump is that he wants defense spending to rise steeply.
Of NATO’s 32 members, 24 now meet the alliance target of spending at least 2 percent of GDP on defense, and Trump is pushing for that to rise to 5 percent — a figure that only Poland comes close to meeting at the moment, with Lithuania having pledged to hit it in the future.
Even if NATO falls short of that target, it’s clear that defense budgets, and defense contracts, will continue to go up.
“The pressure Trump is creating at the moment is good for Europe,” Rheinmetall’s CEO Armin Papperger told Bloomberg this month.
Although European companies will do well, there are limits on how much of that increased spending they’ll be able to absorb.
Defense officials insist Europe needs America’s defense industry more than ever, a recognition that the U.S. military-industrial complex supplies a lot of kit that Europe can’t match thanks to the scale of its arms firms.
Speaking to the European Parliament earlier this month, NATO Secretary-General Mark Rutte banged the drum for faster imports of American arms.
“This was my argument with Trump, open up the U.S. defense market,” Rutte told lawmakers of his discussions with the incoming president. “Because if you want to buy something in the in the U.S., you have to go through Congress, the White House, the Defense Department, Pentagon, etc., before you can get your hands on the Patriot system.”
But European capitals also want to ensure that some of that extra cash goes to domestic companies.
To bolster European production, in his report last year on the state of the EU’s economic competitiveness, former Italian PM Mario Draghi called on EU members to aggregate demand and to raise the share of joint defense procurement.
“As EU defence spending rises, defence industrial consolidation, integration and technological innovation should be supported by reinforced European preference principles in procurement, ensuring that a minimum share of this rising demand is concentrated on European companies rather than flowing overseas,” Draghi wrote.
That’s an idea backed by Swedish PM Ulf Kristersson.
“The more we build a common Europe with common procurement with common standards, the easier it will be to achieve large scale,” he told POLITICO.
Despite the scale of some U.S. companies, Europe still has heavyweights. From two rival programs to develop sixth-generation fighter planes, to a Franco-German project to research a new tank, a program to develop new naval corvettes, the Franco-Italian SAMP/T air defense system, and billions pouring into drone development, European companies expect to continue scoring big contracts as the continent rearms.
“There’s so much money going around,” Rutte said in the European Parliament. “Be good businessmen ... Don’t lose out to the South Koreans.”
Source:politico europe
