The Implications of a Second Trump Presidency for Europe’s Defense-Industrial Efforts

As debates intensify around the defense policy consequences of a second Trump presidency for Europe, much of the commentary misses a critical dimension: the material realities shaping European security and defense. The war of attrition in Ukraine has laid bare Europe’s urgent need for a stronger defense industrial base. Following the U.S. Department of Defense, the E.U. Commission published its first defense-industrial strategy in March 2024, setting even more ambitious targets for joint development and procurement than those previously unmet. The strategy underscores the link between a “buy European” preference in defense procurement and the political goal of strategic autonomy.

Yet, the return of Donald Trump is very likely going to undercut these efforts. Trump’s transactional approach to foreign affairs will heighten the appeal of U.S.-made defense equipment, making it even harder for European countries to resist “buying American.” As a matter of fact, European experts have argued for “the purchase of signature U.S. platforms and munitions” in these pages to increase the bloc’s bargaining power and to prohibit even worse security policy outcomes for the old continent.

Known for his enthusiastic promotion to expand U.S. arms exports, Trump could narrow European firms’ home and potential export markets — a serious challenge given Europe’s already rather fragmented market and European defense companies’ export dependence, especially in contrast to their more self-sustaining U.S. counterparts. As a result, and somewhat paradoxically despite renewed insistence to view Trump’s re-election as a wake-up call for European defense to become more serious and autonomous, the continent will become more dependent on the United States for its security. Warnings over the president-elect’s volatile and erratic character and America’s unreliability as an alliance partner will be glossed over by the continued allure of buying American weapon systems.

Back to the Future

During Trump’s first term and following the Brexit vote, E.U. officials rekindled the then rather dormant field known as the bloc’s Common Security and Defense Policy by launching instruments such as the industrial policy-focused European Defense Fund. Echoing earlier concerns, Trump administration officials were quick to denounce efforts to exclude non-E.U. entities from funding opportunities as a “dramatic reversal of the last three decades of increased integration of the transatlantic defense sector.”

Labeling the trans-Atlantic defense sector as “integrated” might seem ironic to European defense industry representatives, who have lamented the sector’s one-way-street dynamic for nearly half a century. A 1980 report to the Office of the U.S. Under Secretary of Defense for Research and Engineering, William J. Perry, captured this sentiment, noting, “The significant aspects of the NATO arms trade are the low level of such trade within NATO, the U.S. dominance as a producer, developer and exporter and, finally, the sporadic and limited nature of arms cooperation.” Three years earlier, President Jimmy Carter had promised his European counterparts the promotion of “a genuinely two-way transatlantic trade in defense equipment.”

As a remedy, in his final year as under secretary of defense, Perry proposed a “family of weapons” agreement aimed at ending competitive development among allies by fostering licensed production of standardized systems. This approach included a U.S. concession of the Western short-range air-to-air missile market, long dominated by the Sidewinder since the 1950s, to a British-West German missile. In return, Europeans would license-produce the forthcoming Advanced Medium-Range Air-to-Air Missile for beyond-visual-range capabilities.

However, unmet commitments on U.S.-licensed production of the Franco-German Roland air defense system, coupled with increasing U.S. protectionism in arms production, strained these ambitions and led to the agreement’s eventual failure. France, skeptical from the outset, had hedged its bets by developing the Missile d’Interception de Combat et d’Autodéfense, designed to bridge short- and beyond-visual-range requirements. This positioning was strategic: U.S. export restrictions banned beyond-visual-range air-to-air missile sales to regions without such capabilities, targeting areas like the Middle East and Taiwan, both of which soon became the French missile’s first customers.

Weapons for Troops, Bilateral Security Instead of Collective Defense

These historical episodes elucidate that America’s European allies have a political economy problem in their arms production efforts, namely U.S. market power originating from decades of outspending its European allies by a wide margin. They face an inherent and inescapable tension between equipping their armed forces with market-available defense equipment from the world’s leading military power on the one hand, and securing their long-term industrial capacities on the other. Recent analysis, drawing on data from the Stockholm International Peace Research Institute — the foremost authority on international arms trade — reveals the enduring reality of the one-way street in arms procurement, especially for the most technologically complex weapon systems such as fighter aircraft. Even when Europeans can sell their products to the United States, they face the oligopsonist market power that requires technology transfer as well as significant U.S. shares in production.

In examining the likely future of European defense, historical patterns offer insight. The above-mentioned 1980 report reminds readers that U.S. weapons purchases by West Germany “from the mid-1960s until 1977, have been made under an agreement by which the Germans agreed to offset U.S. foreign exchange costs for troops stationed in Germany.” Buying U.S.-made weapons to secure the continued deployment of these forces has been a recurring theme, especially under Trump’s first term, and is likely to intensify in the sequel. While Trump’s rhetoric makes this connection explicit, U.S. allies have long aimed to link their internal and external balancing efforts through American weapons purchases. Such acquisitions not only enhance national military capacity but also reinforce alliance bonds, with the supplier-recipient relationship intended to strengthen ties with the United States.

Studies from prominent European think tanks offer differing views on how much of Europe’s increased defense spending has been directed toward the United States or non-European suppliers, such as South Korea and Israel. A recent report by the International Institute for Strategic Studies presents a more optimistic outlook, noting that 52 percent of platform contracts signed after February 2022 went to European suppliers, compared to 34 percent allocated to U.S. suppliers. In contrast, a September 2023 report from the French Institut de Relations Internationales et Stratégiques claims that 63 percent of contracts favored the United States. These discrepancies underscore the need for better data to inform the ongoing debate about Europe’s defense industrial future — a task that could well be undertaken by the European Defence Agency.

Perceiving American purchases as the most efficient path to security carries a substantial cost. Signature European defense programs, vital for developing next-generation capabilities, face severe funding challenges. Officials have made it clear that these programs ought to rely on exports to achieve meaningful success. Executives from the British-Italian Global Combat Air Programme have emphasized that Japan’s inclusion is designed to unlock the East Asian export market. Similarly, Saab has stated that its strengthened partnership with Brazil, a key Gripen customer, aims to secure entry into the South American market, where nations are looking to modernize their aging fleets with affordable 4.5th-generation fighters like Sweden’s Gripen model. The aircraft’s affordability originates from the inclusion of market-available subsystems and components such as the licensed-produced engine of U.S. origin.

While the exact mechanisms for opening these markets remain unclear — Japan lacks significant arms trade relationships within East Asia, and Brazil’s connections within South America have only recently rebounded — these declarations reveal the European need to envision a viable export market as essential to sustaining their defense projects through the so-called valley of death that multi-billion-dollar developments must traverse after their initial funding surge. A U.S. government that not only loosens arms export restrictions but actively promotes arms sales as a tool for strengthening alliances complicates Europe’s efforts to achieve the economies of scale necessary to make these projects viable.

Europe Is Capable — Really?

Defense may be the most politicized market, but it remains a market. Hence, European defense-industrial capacities are fundamentally shaped by demand expectations that transcend national and often even continental boundaries. A Trump administration, with its likely insistence on higher European defense spending tied to increased purchases of American-made equipment, poses a threat to these sources of demand. Forcing Europeans to shoulder more of their own security burden only strengthens European capabilities if the material means that meet these new security demands are generated within Europe, not simply acquired from the United States.

Research indicates that countries with substantial defense industries tend to allocate more funding toward defense in general, with higher expenditures on equipment and research and development in particular. The claim that “a marked reduction in U.S. military presence will almost certainly end Europe’s decade-long reluctance to spend more on defense” misinterprets the causal relationship. While proposing a U.S. withdrawal might spur increased spending, Europeans will likely tie their purchases of American equipment to the maintenance of the U.S. military presence. The fact that Germany and Italy — two of Europe’s major defense industry stakeholders — host the largest numbers of U.S. troops does not bode well for efforts to boost European autonomy in arms production. Both nations will aim to retain U.S. forces on their soil, while other European purchasers of American equipment, especially those closer to Russia, will compete for a stronger U.S. troop presence.

Viewing Russia’s full-scale invasion of Ukraine as the catalyst for a united Europe acting in lockstep against a common threat often highlights economic sanctions, a field where the European single market’s institutions have clear advantages. However, such interpretations overlook the fact that the worsening security situation has, if anything, intensified longstanding divisions within Europe’s defense industry. This fragmentation is most evident in the Franco-Italian frustration over Germany’s European Sky Shield Initiative, which underscores the persistent challenges to genuine cohesion in European defense.

The Dilemma for U.S. Grand Strategy

The material foundation of the trans-Atlantic alliance presents a strategic dilemma for U.S. grand strategy, challenging both proponents of restraint and advocates of deep engagement. For the latter, who aim to promote burden-sharing among U.S. allies, this entails accepting a more balanced trans-Atlantic defense-industrial competition, even if it requires surrendering some market share. Further, allowing European defense firms a larger portion of their own market may help address proliferation concerns by reducing Europe’s reliance on non-European markets, thus opening the door to a trans-Atlantic arms cartel. Although the relatively small share of exports in U.S. defense contractors’ revenues might make this economically feasible, it is unlikely that Trump administration officials would view it with the same rational perspective.

Advocates of a restrained U.S. grand strategy might find this insight unsurprising, interpreting deep engagement as, at least in part, a concession to the interests of U.S. defense contractors. From their perspective, ceding market share and allowing Europeans a larger role in defense production is essential to reducing the undue influence of defense contractors in Washington. Yet, a U.S. administration driven by a transactional approach could inadvertently intensify Europe’s dependence on the United States as a security provider, undermining genuine European autonomy rather than fostering it.

Paradoxically, despite Trump’s insistence to cut down on U.S. security commitments to Europe, the incoming president’s transactional approach will likely exacerbate existing dependencies, pushing European countries to prioritize U.S. procurement over building autonomous capacities. While European defense spending may increase, the strategic alignment of those resources could drift toward reinforcing bilateral ties to Washington, rather than fostering a genuinely integrated and self-sustaining European defense industry. In this environment, Europe’s pursuit of strategic autonomy continues to be more rhetoric than reality, as geopolitical pressures and market realities accumulate to keep Europe tethered to American defense production and a benevolent presidential administration.

Lucas F. Hellemeier is a Ph.D. Candidate at Freie Universität Berlin’s John F. Kennedy Institute and has recently submitted his Ph.D. thesis on the political economy of European defense. He was a Fulbright visiting researcher at Boston University in 2024 and a Hans J. Morgenthau fellow at the University of Notre Dame in 2022–23.

Image: Wallycacsabre via Wikimedia Commons.