If you think you’ve had a wild first two months of the Trump administration, imagine what it’s like being a European leader. Within his first few weeks in office, Trump called into question the transatlantic alliances that have held firm since the end of WWII and basically said that the continent was on its own in the fight against Russia.
Plus, there was that Zelenskyy White House meeting. The US has resumed arms shipments to and intelligence sharing with Ukraine in the weeks since, but the message to Europe has been pretty clear: it can no longer rely on the US for protection.
And how has Europe responded? With a massive push for investment in continental defense. Earlier this month, European Commission President Ursula von der Leyen unveiled an €800B ($842B) defense budget, including a €150B ($163B) loan plan to buy tech like air defense systems and drones.
Now von der Leyen has unveiled a stipulation. “These loans should finance purchases from European producers, to help boost our own defense industry,” she told European lawmakers last week.
American-made: Why is the EU pushing so hard for domestic arms purchases? Well, it seems that Europe has developed a bit of an addiction to US-made weapons. In the last five years, 64% of arms purchased by Europe were produced in the US, according to a report released by the Stockholm International Peace Research Institute (SIPRI) last week.
That’s up from 52% from 2015 to 2019, supercharged by the war in Ukraine.
Kill switch: If Europe doubles down on buying European, it could hit the US defense industry pretty hard. 35% of US arms exports from 2020-2024 went to Europe, according to SIPRI. Some European countries, including Germany, have already started warning against buying exquisite systems like the F-35 from US producers.
European defense tech companies are also making a massive push. Helsing, an AI and drone company, raised $489M at a $5.4B valuation last year, and is producing thousands of drones that will be sent to Ukraine. According to McKinsey, VC investment in European defense has also increased by over 500% since 2021.