Executive Summary 

NATO’s rapid rearmament, immediate security needs, and gaps in local defense manufacturing have intensified its dependence on the USA for sophisticated military technology and weaponry. However, prolonged reliance jeopardizes Europe’s strategic autonomy, technological self-sufficiency, and the long-term sustainability of European defense sectors. This brief evaluates the benefits and risks of the US-Europe arms trade and recommends a dual-track approach that balances American arms purchases with investment in European technological capability, manufacturing, collaborative defense production. 

NATO’s Growing Dependence on American Arms 

With the rise in inter- and intra-state geopolitical conflict, the USA has cemented its position as the world’s largest arms supplier, accounting for 36% of all arms exports between 2016 and 2020 and 42% between 2021 and 2025 (Mejino-López and Wolff 2026). Over the last decade, American arms exports rose by 27%, reflecting a growing global arms race (George et al. 2026; Mejino-López and Wolff 2026). In light of Russia’s war against Ukraine, Europe has emerged as a budding arms market, accounting for the largest share of US arms exports at 38% between 2021 and 2025, for the first time in 20 years (George et al. 2026). This US-Europe trade relationship is backed by the NATO alliance, where most member nations now face immense pressure to meet armament targets. The combined arms imports of 29 NATO members surged by 143% from 2016-2020 to 2021-2025, with the USA supplying 58% of these imports (George et al. 2026).  

Europe purchases a vast range of technologically sophisticated and strategically vital assets from the USA: helicopters, missiles, combat aircraft, long-range air-defense systems, and other major weapons systems (Mejino-López and Wolff 2026; (George et al. 2026). One of the most important pieces of machinery purchased by Europe is Lockheed Martin’s fifth-generation F-35 Lightning II jets, which, alongside American Multiple Launch Rocket Systems (MLRS), provided essential defense and extensive modernization to European militaries during Russia’s 2022 invasion of Ukraine (Mejino-López and Wolff 2026).  

Additionally, Poland is acquiring advanced drone technology and Barracuda autonomous cruise missiles and Germany is buying Lockheed Martin’s terrestrial Typhon launchers and Tomahawk cruise missiles. As NATO members amplify defense expenditure, questions arise about the relationship between European military capability and American arms exports (South China Morning Post 2026; RFI 2026). Further, the financial magnitude of the US-Europe arms trade is considerable, yielding significant economic advantages through defense contracts and job creation. As of 2025, NATO members have pledged nearly USD $120 billion in defense procurement, with around half of the budget allocated to American-manufactured equipment (POLITICO 2026). 

As of 2026, NATO’s spending trajectory has skyrocketed, with the announcement of more than USD $50 billion in new acquisitions, expanded collective manufacturing capability, and industrial cooperation. Additionally, the EU and Canada are set to spend more than USD $139 billion to meet their essential defense needs, primarily through arms purchases from the USA (The Ankara Summit Declaration 2026). The surge in military expenditure and arms procurement raises a central question: Will the new global arms race reinforce NATO’s dependence on the USA or bolster European defense-industrial capacity? 

Why does Europe Rely on the American Defense Industry? 

Following Russia’s full-scale invasion of Ukraine, European defense expenditure rose from 1.3% of GDP in 2016 to over 2% and military equipment spending doubled to over 0.7% of GDP (Mejino-López and Wolff 2026). European nations also needed to replenish arms supplies, provide military equipment, and bolster the Ukrainian military’s diminished reserves. This created heightened demand that the European defense production sector has struggled to meet across several capability areas (Mejino-López and Wolff 2026).  

To address these capability gaps quickly, nations like Germany have turned to American solutions such as Patriot air-defense systems to strengthen Ukrainian defense (UNITED24 Media 2025). Europe, Canada, Australia, and New Zealand have also allocated €5 billion for American arms through NATO’s Prioritized Ukraine Requirements List (PURL) (Euractiv 2026). Thus, European reliance on American arms has intensified, particularly in acquiring sophisticated technology like missiles, combat aircraft, air defense, and the advanced software and services needed to operate these systems.  

Part of this dependence stems from Europe’s constrained domestic production capability. European governments have increasingly sought assistance from the American industrial sector because of their relatively small defense production sector, modest defense budgets, and a mismatch between defense needs and production capability (Mejino-López and Wolff 2026).  

An unnamed NATO diplomat cautioned that increasing reliance on the US could hinder the growth of European defense manufacturing capability, signifying a wider European endeavor to move towards defense self-sufficiency through programs like the European Defense Fund, Permanent Structured Cooperation (PESCO), and the EU’s Strategic Compass (Euractiv 2026; Vision of Humanity 2026). 

Why do Europe and Canada Continue to Purchase Arms from the USA? 

When faced with immediate military need, American arms provide a quicker solution than scaling Europe’s defense industries. Although defense spending has increased since the outbreak of the war in 2022, domestic manufacturing has struggled to keep up, making US arms exports a crucial resource for building national stockpiles and supporting Ukraine (Euractiv 2026; Mejino-López and Wolff 2026). This is evident in European dependence on American systems like High Mobility Artillery Rocket System (HIMARS), Patriot, and other long-range missile technologies (Euractiv 2026; Mejino-López and Wolff 2026). The PURL mechanism exemplifies this arrangement by enabling European and Canadian governments to sponsor weapons manufacturing in the US to support Ukraine (Euractiv 2026; Mejino-López and Wolff 2026). 

Further, purchasing American equipment enables NATO to supply Ukraine with systems that are already incorporated into allied military frameworks. This minimizes interoperability challenges, especially for software-reliant systems (Mejino-López and Wolff 2026). US-Europe defense collaboration also benefits domestic industries through joint production and maintenance agreements, such as Lockheed Martin’s partnership with Germany’s Rheinmetall for tactical missile manufacturing and their proposed Patriot maintenance centers across the EU (South China Morning Post 2026). 

Alongside these benefits, it is believed that purchasing US arms increases the likelihood of America’s follow through on its political and security commitments to Europe by creating a material stake for Washington, D.C., while strengthening the wider transatlantic alliance amid growing apprehensions about American security assurances (Mejino-López and Wolff 2026). This enduring commercial and institutional interdependence is also built through the economic advantages of arms trade for the US. NATO Secretary General Mark Rutte noted that European investment amounts to over USD $300 billion in arms orders, creating more than 110,000 jobs (POLITICO 2026). 

The Strategic and Industrial Costs of Dependence 

The benefits of the US-Europe arms trade also create vulnerabilities for Europe and Canada’s strategic autonomy. European states now rely on the USA for troops, arms, technology, nuclear protection, intelligence, funding, and political leadership. This excessive dependence can diminish European policy autonomy and exacerbate an existing imbalance as they increasingly rely on American political and military backing. This tension is apparent when American foreign policy objectives conflict with European interests. In the case of the Russian war against Ukraine, American strategy has been characterized as increasingly transactional and ambiguous, with some US officials questioning whether their resources should be used in Ukraine’s defense or to further US military interests in Asia (Mejino-López and Wolff 2026). 

Additionally, integrating and using American systems and software limits military independence, as European troops may require American approval and/or support to operate effectively. For example, F-35 jets–owned by several European nations–rely on the US-operated Odin system, and many navies utilize the US Aegis combat system. A 2018 incident revealed that France sought American authorization to use US-made MQ-9 Reaper drones outside the Sahel (Mejino-López and Wolff 2026; (Defense News 2018). As Europe does not wield similar influence over American policy and military decisions, this trade relationship creates an asymmetric dynamic. This asymmetry is further entrenched as Europe lacks the capacity to develop a self-sufficient military-industrial-digital complex. The French government has repeatedly voiced the importance of domestic procurement and manufacturing capability to maintain strategic independence (Euractiv 2026; Mejino-López and Wolff 2026)   

Ultimately, high European dependence on the USA results in a conundrum: allocating defense budgets to US arms offers immediate capabilities while reducing funds available for purchase from European companies–which are comparatively smaller or less integrated–or investment in military self-sufficiency. This engenders a protracted risk of military-industrial-digital entrenchment.  

Policy Recommendations 

• Dual-Track Procurement Strategy: European and Canadian governments can prioritize self-sufficiency alongside American arms procurement through a dual-track approach that allows them to allocate a portion of their defense budgets to scaling production capacity. The German government, for instance, invests in American Patriot systems for Ukrainian defense while pursuing joint projects with France and Italy to build long-range strike weapons in Europe (UNITED24 Media 2025; Mejino-López and Wolff 2026). 

  
  

• Sustained Demand for Local Systems: European governments can also leverage current EU defense initiatives and collaborative procurement frameworks to ensure consistent demand for locally manufactured systems. The EU Strategic Compass, PESCO, and the European Defense Fund establish frameworks for enhanced coordination, alongside NATO’s 2026 pledge of over USD $50 billion towards domestic procurement and increased collective manufacturing capacity (The Ankara Summit Declaration 2026; (Vision of Humanity 2026). 

  
  

• Increased Production and Exports: Expanding the manufacturing and export capacity of European systems can create viable substitutes to American options and address industrial barriers to scaling. A potential example is the Eurofighter, which has around 600 operational aircraft currently and can boost production and exports if EU members relax export restrictions. A current example is the successful export of French Rafale jets and SCALP cruise missiles to several nations (UNITED24 Media 2025; Mejino-López and Wolff 2026).  

  
  

• Complete Control over Manufacturing: Sweden’s Saab JAS 39 Gripen jets and American-built F-35 jets used by several European militaries depend on US-owned and operated systems even though they are often assembled in Europe. To move toward strategic autonomy, Europe can invest in the underlying software, components, and technological infrastructure required to operate such weapons systems alongside final assembly (Mejino-López and Wolff 2026). 

  
  

• Leverage US Partnerships to Build Capacity: Europe can prioritize collaborative production frameworks over simply shifting defense requirements to American contractors, as in the Lockheed Martin-Rheinmetall tactical missile partnership, the Patriot maintenance center in several nations, and Anduril’s plans to manufacture Barracuda autonomous cruise missiles in Poland (South China Morning Post 2026). This will allow Europe to leverage American capabilities to enhance European production, supply-chain participation, technology development, and maintenance arrangements. 

Conclusion 

The Russian war against Ukraine and subsequent NATO rearmament have created an immediate need for advanced military capability that domestic manufacturers are struggling to fulfill, intensifying the asymmetric arms trade relationship between Europe, Canada, and the USA. While American capability, speed, and scale are unmatched, ongoing reliance exacerbates existing geopolitical, technological, and industrial imbalances. To meet immediate defense needs without letting short-term arms trade relationships shape Europe’s long-term defense strategy, European governments can prioritize strategic diversification. Defense budget allocation can balance US arms exports with domestic production and manufacturing.  

France can fulfill over 95% of its military requirements through local manufacturers and has resumed SCALP missile production; Germany has continued investing in European-owned and built long-range strike missiles; and Poland has expanded production of Piorun air defense systems, illustrating that Europe and Canada can move towards a more sustainable defense framework where domestic capability and autonomy can be balanced with NATO’s rearmament goals, Ukrainian defense, and a collaborative relationship with the USA (TVP World 2025; UNITED24 Media 2025; Mejino-López and Wolff 2026).  

References

Defense News. “Mattis Offers Easing of US Export Limits on French Cruise Missile.” October 2, 2018. https://www.defensenews.com/global/europe/2018/10/02/mattis-offers-easing-of-us-export-limits-on-french-cruise-missile/  

Euractiv. “NATO Allies Confused over Whether to Buy US or European Arms.” February 5, 2026. https://www.euractiv.com/news/nato-allies-confused-over-whether-to-buy-us-or-european-arms/  

George, Mathew, Katarina Djokic, Zain Hussain, Pieter D. Wezeman, and Siemon T. Wezeman. “Trends in International Arms Transfers, 2025.” Stockholm International Peace Research Institute, March 2026. https://doi.org/10.55163/OSMS3959 

Mejino-López, Juan, and Guntram B. Wolff. “Europe’s Dependence on US Foreign Military Sales: Evidence for Policy Makers from a New Database.” Defence and Peace Economics 37, no. 5 (2026): 669–686. https://doi.org/10.1080/10242694.2026.2647243  

North Atlantic Treaty Organization. “The Ankara Summit Declaration.” July 8, 2026.  ⁠https://www.nato.int/en/about-us/official-texts-and-resources/official-texts/2026/07/08/the-ankara-summit-declaration 

POLITICO. “How Trump is turning NATO into a cash machine.” July 5, 2026.  ⁠https://www.politico.com/news/2026/07/05/nato-trump-cash-machine-00985766 

RFI. “As Germany Cuts a Deal on US Missiles, Europe Weighs Up Dependence on Washington.” July 12, 2026. https://www.rfi.fr/en/international/20260712-as-germany-cuts-a-deal-on-us-missiles-europe-weighs-up-dependence-on-washington-tomahawk 

South China Morning Post. “Trump Surprises Nato Allies with Arms Deals and Praise as Summit Ends Positively.” July 9, 2026. https://www.scmp.com/news/us/diplomacy/article/3359902/trump-surprises-nato-allies-arms-deals-and-praise-summit-ends-positively 

TVP World. “Poland Aims to Be Top European Defense Producer within Five Years.” October 8, 2025. ⁠https://tvpworld.com/89358062/poland-aims-to-be-top-european-defense-producer-within-five-years.  

Vision of Humanity. “Europe’s Call to Arms: A Shift towards Military Self-Sufficiency.” February 4, 2025. https://www.visionofhumanity.org/europes-call-to-arms-a-shift-towards-military-self-sufficiency/