Overview
- Shares of defense contractors rose on both sides of the Atlantic, with Kratos up 13%, Lockheed Martin up 4% and Rheinmetall nearing €1,900 after fresh gains.
- The president said he wants a 2027 Pentagon budget of $1.5 trillion, more than 50% above the roughly $901 billion appropriated for 2026.
- Trump urged defense firms to suspend dividends and buybacks to redirect cash into production and maintenance, and he threatened to cap executive pay at $5 million.
- Analysts pointed to likely European beneficiaries, highlighting BAE Systems and Leonardo because of their significant revenue exposure to the U.S.
- Economists disputed that tariffs could easily cover the cost and warned a U.S. order surge could make American industry a bottleneck for Europe, pressing governments to expand domestic capacity.