US defense industry could struggle to sell to new German government: Analysts

BELFAST — Germany’s conservative CDU/CSU-led government in waiting, and Europe’s urgent plan to rebuild its military capabilities through self-reliance, puts US industry and future orders from Berlin on shaky ground long term, a trio of analysts tell Breaking Defense.

Notably, those concerns include whether Germany will stay the course on an $8.8 billion order for Lockheed Martin F-35A fifth generation fighter jets.

Though he has still to formally take up office, Friedrich Merz, the CDU’s choice for chancellor, has proposed securing “independence” from the US, criticized President Donald Trump’s “America first” doctrine and said he is prepared for the “worst case scenario,” implying a future where the US would no longer be considered a trusted ally. Additionally, he has publicly called for Ukraine to be part of peace negotiations with Russia, pushing back on the White House decision to exclude Kyiv and European nations from proceedings.

On Sunday, Merz told German television, “After Donald Trump’s remarks last week, it is clear that the Americans, at any case the Americans in this administration, do not care much about the fate of Europe,” adding, “This is really five minutes to midnight for Europe.”

The US has since opposed a UN resolution condemning Russia’s invasion of Ukraine and sided with Moscow a second time by drafting another resolution, passed by members, which called for an immediate end to the conflict but without any criticism of Russia.

Merz on the other hand has kickstarted German armed forces modernization plans by opening up discussions with the Social Democrats around a €200 billion emergency defense fund, Bloomberg reported on Monday.

Amid such moves, posturing and strategic thinking rests the F-35 order, comprising 35 aircraft, and a collection of other highly lucrative US contracts, including Boeing P-8A Poseidon Maritime Patrol Aircraft (MPA), CH-47F Chinook heavy-lift helicopters and RTX Patriot air defense systems.

Assessing the level of cancellation risk tied to the four major orders, JJ Gertler, a senior analyst at the Teal Group, told Breaking Defense, “The most significant existing contract in which there may be buyer’s remorse and an attempt to go a different direction is the German commitment to F-35.”

He put the stealth jet at the top of the list as it demands “an ongoing relationship with the United States, because of their presumed access to all of the data going to and from the airplane,” and added “it is not a one-time purchase decision like some of these other systems, and the US’ reliability as a partner has to be considered more seriously.”

Similarly, Richard Aboulafia, managing director at AeroDynamic Advisory, a consultancy firm, said that “the most survivable US export programs are the ones that need the least care and feeding from the US, and can be sustained with in-country resources. The F-35 is incredibly dependent on a constant stream of upgrades and parts.”

Offering an opposing view, Jim Townsend, adjunct senior fellow in the transatlantic security program at the Center for a New American Security thinktank, said that the F-35 order is “safe,” largely because Germany has “no other option” but to acquire the aircraft to replace retiring Panavia Tornados.

Political objections previously troubled Lockheed’s attempt to sell the aircraft to Berlin, when it was ruled out of consideration in 2019, only to be selected three years later and ahead of European fourth generation fighters.

The German F-35 fleet is also set to be equipped with US B61-12 bombs to undertake NATO nuclear deterrence missions, with first deliveries expected in 2026.

A spokesperson for Lockheed Martin told Breaking Defense in a statement, “Questions regarding German politics are best addressed by the German government. Questions relating to Germany’s procurement of F-35, through a government-to-government contract, are best addressed by the governments involved.”

At the other end of the spectrum is the contract to procure 60 CH-47F helicopters, which the analysts said is likely to continue forward, in part because the only competition was between two US firms — Boeing and Lockheed, which was offering its CH-53K King Stallion design. (Boeing declined to comment.)

The ”odds of [CH-47F] cancellation are probably lower than in a case where the runner-up was European (or where a viable European counterpart might exist, like Airbus’s intent to develop a P-8 equivalent based on their airliners)” explained Gertler.

The Chinook case is also helped because the aircraft can be supported by “in-country depots,” as opposed to over reliance on the transfer of supply chain goods from the US, according to Aboulafia.

In 2024, Tim Flood, Boeing’s vice president of international business development, told Breaking Defense that the company plans on making first CH-47F deliveries to Germany in 2027, while the first of eight P-8’s is due for handover this year.

Air defense is another major investment for Germany, as over the course of 2024 alone, Berlin inked two Patriot air and missile defense system orders worth $2.4 billion and received approval from the US State Department to acquire up to 600 Lockheed Martin Patriot Advanced Capability-3 (PAC-3) Missile Segment Enhancement munitions and related equipment, valued at approximately $5 billion.

Additionally, Germany is one of four European countries involved in a $5.5 billion acquisition of up to 1,000 Patriot Guidance Enhanced Missiles (GEM-T). The deal is contracted to COMLOG, a joint venture between RTX and European missile house MBDA, through the NATO Support and Procurement Agency.

RTX deferred questions on Patriot to the German government for this report.

Like Europe as a whole, Germany is acutely focused on replenishing air defense stocks to replace systems gifted to Ukraine. Berlin has supplied Kyiv with an undisclosed number of Patriot missiles as well as three complete systems, including spare parts and four launchers, according to a military support factsheet. Patriot has been credited with shooting down Russian Kh-47M2 Kinzhal hypersonic missiles and Su-34 fighter jets during the war, though delivery delays have been a point of tension.

Townsend voiced confidence that Patriot orders for Berlin will go through as planned, noting the weapon system “is too important for German air defense to be left behind and the delivery schedule is too long to delay the purchase.”

Aboulafia added that a lack of alternative options could keep missile defense deals with the US on track.

“Conceivably, Eurofighter could replace the F-35, with enough time/money to qualify it for the nuclear mission,” he said. “By contrast, Patriot might just be in a class by itself.”

Long Term Concerns?

Currently signed agreements may be one thing, but there seems to be agreement among the analysts that future US sales to Germany will face longer odds.

Gertler, for example, forecast that Merz’s push for “independence” will likely lead to a situation where “the US will lose its position as the default answer to every hardware requirement.” He added, “Going forward, there will be no preference for US equipment stemming from a regard for their role as a guarantor of European security – at least so long as that commitment remains vague.”

As Germany becomes more “protectionist” in a bid to deliver weapons programs and rearmament at pace, US market entry restrictions or complete loss of market access could take hold, suggested Townsend, especially if the European Union decides to take more of a leading role over major projects.

Earlier this week, European Commission President Ursula von der Leyen launched plans related to a new “designated European instrument” that she said would let the bloc deliver “targeted and efficient defense spending” and that would specifically support European integrated air defense, deep strike capabilities, UAVs, ammunition and missiles, per Politico.

“I think in the short to medium term, the US will have the upper hand” over Europe, said Townsend. “But in the long term, if European industry is able to rise to the challenge, they’ll have competition, particularly in terms of price. The US tends to have the pricey, exquisite systems and maybe that’s not always the answer to things.”