The military worldview continues to shift as President Donald Trump breaks from long-standing U.S. allies and partnerships. New reports indicate that Canada is reviewing its planned deal for a fleet of U.S. F-35s. Meanwhile, the European Commission is drafting a plan to revitalize its defense industry, while Germany passed legislation freeing the country to spend hundreds of billions of euros in order to bolster its defense.
Canada Prime Minister Mark Carney on Monday said that he was reviewing Canada's planned acquisition of 88 F-35 fighter jets from Lockheed Martin, due to changes in the geopolitical landscape and a need to secure more domestic defense production, the Wall Street Journal reported. The current pact, estimated around $13.3 billion, was finalized in 2023 with deliveries set to start next year. Canada planned for the purchased aircraft to be in operation by 2034.
Carney on Monday reportedly met with French President Emmanuel Macron and U.K. Prime Minister Keir Starmer. The leaders discussed working with Europe on jet fighters and having some of that work done in Canada.
"Given the geopolitical environment, given the fact that there are options ... (and) given the possibility of having substantial production of alternative aircraft in Canada," it was prudent to review the Lockheed Martin contract, Carney said.
Lockheed Martin is the primary contractor for the F-35. Northrop Grumman, BAE Systems, RTX's Pratt & Whitley division, and other defense firms serve as subcontractors for the aircraft.
Carney cited Portugal's decision last week to reconsider its plans to acquire the Lockheed Martin jets, and added that Europe is contemplating new major defense spending to protect the continent against external threats. That could provide a boost to Canada, because it has the potential to reroute supply chains and allow Canadian businesses to participate in defense development, Carney added. Carney over the weekend also invited Ukraine President Volodymyr Zelenskyy to the Group of Seven leader's summit, which Canada is hosting later this year.
Potential Retaliation
However, Eric Martel, CEO of Canada-based defense contractor Bombardier, warned that President Trump could retaliate if Canada cancels the order.
"Effectively, we could be targeted, that's my fear," Martel told reporters at the Canadian Club of Montreal on Monday. About 60% of Bombardier's business comes from the U.S., with its planes built and shipped under the U.S.-Mexico-Canada agreement, Bloomberg reported.
Bombardier currently has two contracts with the U.S. military. One supplies communications planes to the Air Force, while the other supplies spy planes to the Army, according to Postmedia.
The U.S. Army deal was announced in early 2024 and is worth up to $465 million. That came after Bombardier lost out on a Canadian surveillance jet deal to Boeing, which was worth about $7 billion.
"Canceling the F-35s might be a good idea, but we need to think about it," Martel said. "We have contracts with the Pentagon. Will there be reciprocity there?" Still, Martel agrees Canada does need to shift away from its reliance on the U.S.
"We've been hiding behind our big brother for a while, and we're completely dependent on him militarily," he added.
Bombardier in February removed its financial outlook for the year due to risk and uncertainty surrounding Trump's tariffs on Canada.
Europe Ramps Up Defense Production
Elsewhere, the European Commission is putting forward a plan to boost defense production and support Ukraine, while the U.S. mulls reducing military support across the continent, Dow Jones Newswires reported on Friday.
"Rebuilding European defense requires massive investment, deeper collaboration among Member States and a sustained effort over the years to come," the document reads. It is still in its draft stage.
The white paper said that the sector "needs to be able to meet Member States' demand and produce at scale, stockpile, and quickly move equipment within the Union."
The EU executives included a range of policies such as favoring weapons manufactured in the bloc, encouraging member states to collaborate on joint procurement, prioritizing investments in drones, air and missile defense systems, and easing bureaucracy regarding defense spending. The Commission said it will bring forward a separate plan to reduce red tape by June this year.
Elsewhere, European Commission President Ursula von der Leyen on Tuesday said the commission will set up a European Military Sales Mechanism to simplify rules around joint procurement to help member states pool their demand for defense systems.
"Today the majority of defense investment goes outside Europe," she said during a speech in Copenhagen. "In other words: good jobs outside Europe. Research, development and innovation outside Europe. This is not sustainable. We must buy more European."
The package could benefit EU defense manufacturers such as France-based Dassault Aviation, Rheinmetall of Germany or Italy's Leonardo, among others.
Europe currently produces three types of fighter jets. The Eurofighter is built by a coalition of the U.K., Germany, Italy and other countries. France produces the Rafale, while Sweden builds the Gripen. However, those fighters are not as sophisticated as the F-35, and lack its stealth technology and advanced sensors.
The U.K., Italy and Japan are collaborating on a sixth-generation fighter that is expected to enter service in about 10 years, according to the WSJ. France and Germany are working on a separate next-gen aircraft.
Ukraine Support
The EU document also calls for greater support to Ukraine in an effort to stop Russia's invasion. The European Union has provided around 50 billion euros to support Ukraine since Russia started the latest stage of the war in February 2022.
"Without significant additional military resources, particularly now that the U.S. has suspended its support, Ukraine wouldn't be able to negotiate a just and lasting peace from a position of strength," according to the document.
The document calls for developing large-scale, Pan-European projects and joint-purchasing among member states to address capability gaps. It also suggests setting up a task force to assist Ukraine's procurement needs, while streamlining EU military support. The document states that the European Investment Bank needs to "urgently step up support to the European defense industry, notably by further narrowing the list of excluded activities and increasing the volume of available funding."
Defense Stocks
LMT stock rose a fraction Tuesday following the news. Shares were little-changed premarket Wednesday. Lockheed Martin has rebounded almost 12% from its mid-February low. Still, shares are down about 4% in 2025 and trading well below their preelection record high of 618.95 from October.
RTX stock ticked higher on Tuesday and Wednesday. Shares are trading in a buy zone for a cup base, not too far off their all-time high of 135.36 from March 3.
NOC stock was little changed premarket Wednesday. Northrop shares are up more than 4% this year, having clawed back some of the drop to February lows.
U.K.-based BAE Systems is up nearly 24% in March and trading at record highs. BAESY stock has rallied 52% so far this year, MarketSurge charts show.
Dassault Aviation shares, trading on the Euronext Paris exchange, eased about 1% Wednesday. The stock boasts a 59% year-to-date gain.
Rheinmetall stock fell 4.5% Wednesday on the Frankfurt exchange, paring its 5.7% gain from Tuesday. Shares have soared 128% in 2025.
Leonardo shares advanced 2.7% Wednesday. Leonardo stock is up 86% this year. It trades on the Euronext Milan exchange.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
