The extent to which European defense companies benefit from U.S. weapons procurement and joint projects is highly significant, but also highly asymmetrical. While the dominant flow of revenue is from Europe purchasing U.S. equipment, European firms gain crucial financial, technological, and strategic advantages through their integration into the U.S. defense supply chain and through specific high-profile joint projects.

This relationship is best described as a complex, two-way street where the traffic is overwhelmingly heavier in one direction, yet the minor-traffic benefits are critical for the European defense industry's long-term survival and technological advancement.

The Primary Asymmetry: Europe as a U.S. Market

The most notable factor in the transatlantic defense industrial relationship is the overwhelming imbalance in sales: Europe is a far more important customer for U.S. defense companies than the U.S. is for European defense companies.

The Post-2022 Procurement Surge

Following Russia's full-scale invasion of Ukraine in 2022, European defense spending surged. Much of this funding was directed toward replacing Soviet-era equipment and replenishing stocks, often resulting in significant sales for the U.S. defense industry.

• Dominance of U.S. Sales: Reports indicate that between mid-2022 and mid-2023, approximately 63% of the European Union's defense procurement spending went to the United States. This trend continued a historical pattern, driven by factors like:

  • Availability and Speed: U.S. systems were often the most quickly available to meet urgent operational needs (e.g., long-range artillery, air defense).

  • Interoperability: NATO allies prioritize procuring U.S. systems to ensure interoperability with the U.S. military, which remains the cornerstone of European security.

  • Technological Gap: For high-end, complex systems like advanced fighter jets (the F-35) or certain long-range missile defense systems (Patriot), the U.S. often fields a proven capability that Europe has not yet developed or produced at scale.

• The "Buying American" Effect: This flow of European cash into the U.S. military-industrial base is generally seen by European policymakers as detrimental to the formation of a truly sovereign and competitive European Defence Technological and Industrial Base (EDTIB). However, for individual European nations, buying American provides superior political capital and the security guarantee of alignment with the world's most capable military.

Direct Benefits: Integration into U.S. Supply Chains

Despite the asymmetry in prime contractor sales, European defense companies derive substantial, high-value benefits from their integration into U.S.-led global supply chains.

The F-35 Program: The Model of Transatlantic Industrial Cooperation

The F-35 Joint Strike Fighter (JSF) program is the single most important example of this benefit. The program was structured from the start with international partners, including several major European countries.

• Financial and Industrial Offsets: European partners—notably the United Kingdom (Tier 1 Partner), Italy, and the Netherlands (Tier 2 Partners)—contributed billions to the jet's development. In return, their defense companies secured high-value, long-term manufacturing contracts for components and systems that go into every F-35 built, regardless of whether the jet is sold to the U.S., a European nation, or a third country.

  • Example: Companies like BAE Systems (UK) and Leonardo (Italy) are key suppliers for the airframe, wings, and final assembly, providing jobs and revenue streams independent of national F-35 orders.

  • Example: German firm Rheinmetall is producing the center fuselage sections for the F-35, a massive industrial investment that integrates a major German player into the U.S.-led global aerospace supply chain.

• Technological Acquisition: Participation grants European companies and governments access to cutting-edge U.S. defense technology and manufacturing processes. This benefits their own indigenous programs and enhances their overall technological sophistication, although the U.S. maintains strict control over the most sensitive software and source codes.

Benefits from Joint Projects and Collaboration

Beyond the F-35, European firms benefit through strategic partnerships and joint venture programs with U.S. defense giants, particularly in areas where Europe has a competitive advantage or where U.S. companies seek to gain local market access.

Co-Development and Co-Production

These partnerships allow European firms to co-develop or co-produce U.S. systems, gaining revenue and expertise in high-demand capability areas.

• Guided Missiles and Munitions: European companies like Rheinmetall have recently expanded cooperation with U.S. firms like Lockheed Martin to serve as a European center of excellence for the manufacturing and distribution of various rockets and missiles. This partnership allows Rheinmetall to contribute to the production and gain a major sales role in the fast-growing European market for U.S.-designed long-range precision weapons (e.g., the GMARS multiple rocket launcher system).

• Land Systems: U.S. companies with significant European subsidiaries or partnerships (e.g., General Dynamics European Land Systems) employ thousands of Europeans and contribute to the manufacturing and maintenance of ground vehicles that are often jointly procured by European forces.

• Maintenance and Sustainment Contracts: When European nations purchase U.S. equipment (e.g., Abrams tanks, Apache helicopters, Patriot missile systems), the long-term maintenance, repair, and overhaul (MRO) contracts are often executed by local European subsidiaries or partner companies. This provides decades-long, stable revenue and technical expertise to the domestic defense sector, mitigating some of the revenue loss from the initial procurement.

Strategic and Indirect Benefits

The partnership provides indirect, yet vital, strategic benefits that bolster the European defense industry's long-term health.

• Standardization and Interoperability: By participating in U.S.-led platforms like the F-35, European companies align with NATO-standard technical specifications, which simplifies joint operations and provides a large, reliable market (NATO) for their own domestically produced components that must integrate with U.S. systems.

• R&D and Investment: While U.S. defense R&D spending vastly outstrips Europe's, cooperation allows European companies to share the astronomical development costs of next-generation programs. This free access to U.S.-funded innovation helps European firms maintain a competitive edge without the full financial burden.

In conclusion, the benefit to European defense companies is substantial, but focused. They are not the prime beneficiaries of the European defense spending surge—that distinction belongs to their U.S. counterparts. Instead, the benefit is derived through their successful establishment as critical sub-contractors and joint-venture partners in major U.S.-led programs.

This integration provides a vital stream of revenue and technology, allowing them to remain relevant in high-tech fields and preserving a portion of the European defense industrial base, even as European nations continue to overwhelmingly "Buy American" for their most critical military needs.