The Consequences of a US Retreat From Military Commitments
Article 2 on Ukraine Aid: Allied Confidence and U.S. Commitments: “The Trump Effect”
Previously, I wrote about how Ukraine Aid could be profitable to the US even if we only examine the financial implications. In this second part, I discuss how those benefits are evaporating as we pull back our military commitments supporting the current world order.
U.S.-made Apache attack helicopters and Abrams tanks participated in a joint live-fire exercise in Poland, a NATO ally. Countries like Poland have become major buyers of American arms since 2022, ordering systems ranging from helicopters to Patriot missiles. Robust foreign demand for U.S. weaponry has driven American arms sales to record levels, thereby indirectly boosting U.S. tax revenues.
In part one, I illustrated how military aid to Ukraine might actually have a positive return on investment for the U.S. government. The crux of the argument is that aid to Ukraine is an advertisement for the effectiveness of U.S. weapons and has dramatically increased U.S. weapons purchases. These purchases increase GDP which then increases government taxes. I then argue that the projected increases in purchases more than make up for the aid expenditure.
While these economic trends have favored the U.S. defense industry, political developments are introducing uncertainty. During Donald Trump’s presidency and continuing into the current campaign rhetoric, European allies began questioning how reliable the U.S. would be as a defense partner – particularly with regard to backing Ukraine and honoring NATO commitments. Trump’s administration took a transactional view of alliances, with the President frequently scolding European allies for not spending enough on defense and even openly musing about not coming to their aid if they were attacked. In one notorious episode, the Trump White House froze congressionally approved military aid to Ukraine in 2019. In his second term Trump repeatedly suggested the U.S. might suspend support to Ukraine or become a neutral broker. He also made startling statements such as suggesting the U.S. should seize Greenland from Denmark and joking about turning Canada into the 51st state – comments that, while not policy, deeply rattled U.S. allies.
European officials interpreted these actions as warning signs. Trump’s questioning of NATO’s Article 5 mutual defense guarantee and the abrupt aid suspension to Ukraine were seen as undermining the decades-old U.S. security pledge to Europe. A former Swedish prime minister bluntly warned that the United States was “not a reliable ally” and that NATO could be left as an empty shell if U.S. policy veered toward isolationism. Although President Joe Biden’s administration recommitted to NATO and Ukraine, allies remain anxious about U.S. next step. The prospect of a Trump or Trump-like presidency returning in 2025 has led to quiet contingency planning in European capitals. NATO government’s worry that a sudden U.S. pullback – or even a political impasse in Washington – could jeopardize the support Ukraine’s war effort depends on. This climate of uncertainty is already affecting allies’ defense procurement choices, as they hedge against the risk of an unsteady American partner.
Allies Reevaluate U.S. Arms Deals
One immediate consequence of doubts over U.S. commitment has been a reconsideration of big-ticket arms purchases that tie allies closely to American supply lines. For decades, buying U.S. weapons came with an implicit guarantee of American protection and support. Now that selling point is falling flat for some, as the underlying guarantee is in question. In March 2025, officials in Portugal and Canada – two NATO members traditionally aligned with the U.S. – signaled they were having second thoughts about planned acquisitions of the U.S.-made F-35 Lightning II stealth fighter. Portugal’s defense minister, Nuno Melo, publicly suggested that Lisbon may need to look elsewhere for its next-generation jets given the geopolitical environment and concerns about the predictability of its allies. He noted that “We have to believe that, in all circumstances, these allies will be on our side,” – Portugal must consider European-built alternatives (such as France’s Rafale or Sweden’s Gripen) despite their higher upfront cost. Melo even voiced worry that reliance on U.S. hardware could leave European militaries vulnerable to coercion or supply cut-offs by a future U.S. administration — for example, through withheld parts or support.
European defense spending is accelerating, and much of the purchasing will shift from US exports to local defense manufacturing.
In Canada, which had just selected the F-35 for a $14 billion fleet upgrade, newly installed officials indicated they might halt the procurement midstream. Canada’s Defense Minister in early 2025 confirmed that the government is actively considering alternatives to the 88 F-35s on order. The leader of a key parliamentary party went further, arguing that “purchasing from the United States at this time is not in our national security interest”. Notably, Canada has already paid for 16 of the 88 fighters, but could cancel the rest and potentially turn to Saab’s Gripen, which had been the runner-up in Canada’s competition. Such a move would have been unthinkable a few years ago, and it has prompted a “giant political and economic red flag for our country” in Washington about eroding confidence in U.S. defense guarantees.
These are early signals – no allied government has yet formally canceled a major U.S. arms contract. However, the trend is causing serious reflection in the American defense industry and government. Foreign military sales are crucial to the health of the U.S. defense industrial base; in 2024, total foreign military sales (FMS) and direct commercial sales of U.S. defense articles reached $317 billion — a figure that underscores how much America’s arms industry relies on exports. If even a portion of NATO’s advanced weapons procurement shifts to non-U.S. suppliers, it could eventually weaken the ecosystem that supports American production lines. U.S. officials are therefore watching decisions like Denmark’s upcoming choice between the American Patriot air-defense system and Europe’s SAMP/T, or Poland’s mix of U.S. and Korean purchases, as bellwethers of whether Buy American remains the default for allies.
European defense stocks surge in anticipation of increased business as both the EU ramps up military spending and contemplates shifting to local defense manufacturers. Source: Yahoo Finance.
At the same time, European leaders are taking collective steps to reduce their over-reliance on U.S. equipment. In late 2024, the European Commission unveiled a €150 billion European Defense Investment plan for joint weapons procurement – notably, it largely excludes the U.S. as a supplier. France has revived its longstanding push for European countries to “buy European” when possible, as a matter of strategic autonomy. This momentum has only grown with the uncertainty over U.S. politics. As one Paris-based defense analyst observed, the added value of buying American weaponry – namely integration with U.S. strategy and assured U.S. backing – is being called into question; if the transatlantic link weakens, European governments see less incentive to choose U.S. systems over indigenous ones. In short, NATO allies still value U.S. arms, but some are hedging their bets, diversifying their arms purchases in case the geopolitical winds shift.
NATO Allies Strengthen Domestic Defense R&D
In parallel with rebalancing their import portfolios, U.S. allies are investing heavily in their own military R&D and production capabilities. This may not be a bad thing for the U.S. though. Europe in particular has recognized that it must be able to equip itself, both to meet the demands of the war in Ukraine and to prepare for a future in which U.S. support might be less certain. Top EU officials have announced sweeping plans to boost defense spending and innovation across the continent. In 2025, the EU outlined a program named the “ReArm Europe Plan”, that could “mobilize up to €800 billion” for defense through joint procurement and special financing. EU governments explicitly underline the importance of funding research and development, emphasizing that a significant share of this new spending should go toward modernizing Europe’s defense industry and next-generation technologies. This represents a conscious effort to close the R&D gap that had widened over decades of underinvestment – European militaries found themselves with “a lot of gaping holes” in equipment and stockpiles when Russia invaded Ukraine, and filling those gaps will require sustained innovation, not just purchases off-the-shelf purchases.
European NATO members are also coordinating to expand manufacturing capacity for critical munitions and hardware. A salient example is the continental shortage of artillery ammunition revealed by the Ukraine war. In 2023, the EU launched the European Act in Support of Ammunition Production (ASAP) to help countries collectively produce 2 million 155mm shells per year, aiming to both supply Ukraine and replenish NATO stocks. Although challenges — such as limited TNT supplies have slowed the production, the initiative reflects a new seriousness about building strategic industrial resilience. European defense firms are receiving large infusions of cash to ramp up output. For instance, Germany, Poland, and others have increased their defense budget to meet demand. NATO as a whole is encouraging such moves; alliance officials speak of the critical importance of a robust European defense industry that can surge production in a crisis.
Artist’s concept of the next-generation fighter jet under development by the UK, Italy, and Japan through the Global Combat Air Programme (GCAP). This ambitious joint R&D project aims to field a sixth-generation stealth fighter by 2035, illustrating U.S. allies’ efforts to develop advanced military technology independently. The GCAP venture, hailed as a “pivotal moment” for the defense industry, seeks to reduce participants’ reliance on U.S.-built aircraft while fostering innovation and export opportunities.
Another notable trend is the rise of multinational development programs among U.S. partners. Rather than buying American-made systems, allies are pooling talent and resources to produce their own. The Global Combat Air Programme (GCAP) is a prime example: the United Kingdom, Italy, and Japan have teamed up to design a new sixth-generation fighter jet to succeed the Eurofighter Typhoon in the late 2030s. A joint venture company was formed in 2024, bringing together BAE Systems, Leonardo, and Japanese industry, with an aim to deliver a cutting-edge stealth aircraft that can rival the F-35 and be marketed globally. This kind of project was driven not only by industrial logic but also by geopolitics – a desire for high-end capabilities that are not subject to U.S. export controls or shifting U.S. political winds. Similarly, European nations are collaborating on other systems: the French-German-Spanish partnership on a Future Combat Air System (FCAS), a host of EU-funded drone and cyber defense projects, and joint procurement of air defenses that favor European options. While many of these initiatives are in early stages, they signal a strategic decision among NATO members to cultivate domestic innovation ecosystems. Europe is leveraging tools like the European Defence Fund (EDF) to finance R&D in areas such as AI, space, and next-generation materiel. Experts have urged that at least 20–25% of new defense expenditures be dedicated to R&D and emerging technologies to ensure Europe can keep pace in modern warfare. The NATO alliance is also supporting this push: it launched the Defense Innovation Accelerator (DIANA) in 2023 and a new €1 billion NATO Innovation Fund to invest in dual-use startups, indicating a collective commitment to technological advancement among Western allies.
In addition to purely domestic efforts, co-production arrangements between the U.S. and allies are increasingly used to bolster allied industries. Rather than simply selling finished weapons, U.S. companies are partnering to build them on allied soil. A recent case is Poland, which agreed with the U.S. to locally produce components of systems like the Patriot air defense battery and other equipment as part of its purchase deals. In Germany, Raytheon (RTX) and European missile-maker MBDA just opened the first-ever Patriot missile facility in Germany, which will produce over a thousand missiles annually for NATO customers. Such ventures transfer skills and supply chain activity to allies, strengthening their self-sufficiency. From Washington’s perspective, co-production is a way to reconcile allies’ desire for autonomy with continued U.S. involvement – it keeps allies tied into U.S.-designed platforms but gives them a stake in the manufacturing and jobs. Over time, these collaborations could make allied defense sectors more robust, potentially reducing the net import of U.S. arms. However, they also bind the U.S. and its partners closer in industrial terms, making the alliance more resilient. In short, NATO governments and other U.S. partners (like Japan, Australia, South Korea, etc.) are embarking on a generational build-up of defense R&D and industrial capacity. This represents a major shift after decades of dependency, and it will be a key factor in the future balance of the global arms trade and the returns the U.S. derives from it.
Conclusion
The returns due to Ukraine aid are neither automatic nor guaranteed to continue indefinitely. They depend on specific conditions: a protracted conflict that keeps demand high, and allies’ continued trust in the U.S. as an arms supplier of choice. The recent developments examined above show that geopolitics can quickly alter the equation. If NATO allies lose confidence in U.S. security commitments and accelerate moves toward alternative suppliers or self-sufficiency, the franchise value of American arms – built on the promise that buying from the U.S. means the U.S. will stand with you. We are already seeing early signs of this erosion in the reevaluation of fighter jet deals and Europe’s push for indigenous defense capabilities. Such shifts, if they deepen, could moderate the long-term financial windfall the U.S. defense sector currently enjoys from the Ukraine war. In essence, the strategic credibility of the United States is an underlying asset in the ROI calculation for aid: it is the guarantee behind the goods. Undermining that credibility (through isolationist politics or inconsistent support) may diminish future returns.
Conversely, one might argue that even allies’ efforts to arm themselves benefit the U.S. to a degree. European rearmament – whether via American imports or domestic production – contributes to a stronger collective defense that deters adversaries like Russia. The U.S. will still be a key partner, if not the sole arsenal, in that effort, through co-development, licensing, or supplying critical components. In other words, a more capable Europe can complement U.S. interests, even if it buys fewer finished American systems. The outcome to watch is whether the transatlantic defense relationship evolves toward a more balanced partnership or whether fractures lead allies to chart an independent course away from U.S. influence.
In summary, U.S. aid to Ukraine has thus far been an astute investment, yielding tangible returns by boosting American industry and potentially even turning a profit for taxpayers. It has also reinforced U.S. global leadership by showcasing the quality of U.S. military technology and the benefits of aligning with Washington. To maintain both the economic and strategic dividends, however, U.S. leaders will need to reassure allies of America’s steadiness. The profitable “Ukraine aid trade” was made possible not just by U.S. weapons, but by the faith of many nations in U.S. support. As the geopolitical landscape shifts, staying true to that role may be the best guarantee that investments in collective defense continue to pay off – for Ukraine, for the free world, and for the United States itself.
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