Trump's weakness — the dependence of the American defense industry from European orders

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You see, there is an interesting situation in the United States: on the one hand, the Trump administration is proposing to cut spending on the American defense industry, and on the other hand, many American companies have invested in expanding weapons production in anticipation of specific government orders. Many of these new production facilities would have reached their planned production volumes in 2025 or the first half of 2026.

Therefore, the Trump administration will face a situation where the US defense industry will end up completing its expansion, a decision that was made under the Biden administration, but the facilities will remain idle due to the lack of sufficient orders, as the main buyers should be the US and Ukraine for the needs of the Ukrainian Armed Forces. It is one thing when it comes to the expensive F-35, where orders are scheduled until 2035 inclusive, but it is a different question when it comes to consumables such as ammunition, ATGMs/ MANPADS, ammunition, and other items that require stable, and most importantly, large annual contracts to maintain production and to ensure a return on investment.

The situation is aggravated by the fact that the US defense market is consolidated among 6-8 major corporations. Most of them are going through hard times.

For example, Trump's policies and expectations of the new administration's policies have already caused a collapse in the shares of American defense companies:

• Lockheed Martin: $423 per share. For the month minus 16.4% (-83$).

• Raytheon Technologies: $122.4 per share. For the month minus 2.66% (-$3.34)

• Northrop Grumman: $438.9 per share. For the month minus 13% (-$65.55)

• General Dynamics: $241.9 per share. For the month minus 10.9% (-$29.7)

 Meanwhile, shares of European defense companies are breaking records:

•  Rheinmetall: 935 euros per share. For the month plus 34.9% (+240 euros).

• BAE Systems: £1,339 per share. For the month plus 9.4% (+115 pounds)

• Thales: 179 euros per share. For the month plus 19.6% (+29.4 euros).

• Airbus: 171.9 euros per share. For the month plus 5.2% (+8.5 euros).

The consolidation of the American military-industrial complex is an advantage in normal circumstances, but in this aspect it is a disadvantage. Since bankruptcies or financial problems of one manufacturer are bound to affect the state of the entire defense industry.

Therefore, the situation is as follows:

If the White House is not ready, as in the Biden era, to allocate funds for additional orders from the American military-industrial complex, the only way out is to increase these orders from outside (Europe).

But at the same time, the White House is allowing a toxic policy in which, on the one hand, the United States accuses Europe of defense weakness, and on the other hand, the United States insist on ordering mainly from an American manufacturer, while blackmailing Europe with the security and the United States' place in NATO.

Draghi's response to the American claims about Europe's weakness is correct and concise:

“Yes, we have a weak defense capability and the main reason is a fragmented and underfunded military-industrial complex. We have to fix it. But by investing in American manufacturers, we will not be able to modernize and develop our own defense industry.”

That is why a number of European countries are advocating the use of defense bonds exclusively for joint production in the EU, the UK, Norway, and Ukraine. Trump's statement is precisely the pressure and anticipation that Europe will invest jointly loaned funds for defense needs in American weapons orders. This approach would be a mistake. The defense fund that will be created in Europe for strategic reasons should finance mainly European arms production and arms production in Ukraine as an integral part of European security and part of the common European defense capabilities.