In the US, defense industry leaders are bracing for President-elect Donald Trump’s return to the White House, which could be “more disruptive” than his first term, when Trump showed a willingness to shake up the status quo in the field and personally interfered in procurement decisions, the Financial Times reports.

It is noted that since Trump's election victory in November, "shares of most major U.S. defense groups have underperformed the broader S&P 500 index amid uncertainty about what a second term means for defense spending and weapons programs."


The article says that the emergence of Palantir, co-founded by tech billionaire Peter Thiel, and drone maker Anduril, already competing for a large portion of the $850 billion defense budget, has “confused investors in traditional contractors.”

“I think the new administration is certainly interested in encouraging new entrants to the defense sector,” said Stacey Pettyjohn, director of the Center for a New American Security’s defense program.

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The publication recalled that recently, during hearings, Trump's nominee for Secretary of Defense, Pete Hegseth, emphasized the need to accelerate weapons development through competition and innovation.




He also criticized the Pentagon for becoming “too insular” and trying to “block new technologies.” At the same time, he praised Silicon Valley, which for the first time in many years “has demonstrated the willingness, desire and ability to apply its best technologies.”

However, despite Trump's unpredictability, industry experts expressed their vision of the situation in the defense sector of the United States and, accordingly, Europe for the near future.

There is talk that cuts to some major weapons production programs are possible, especially if the Pentagon plans to allocate funds to new types of defense technologies focused on artificial intelligence or software.

“Lockheed Martin’s F-35 – the world’s largest defense program – was the biggest target of Elon Musk’s social media criticism of stealth aircraft last year. It alone accounts for more than 25 percent of Lockheed’s sales,” the article notes.

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A reduction in production of Virginia-class submarines is also likely, said Byron Callan, managing director of research group Capital Alpha Partners.

In addition, the US defense sector will be affected by the war in Ukraine. It has accelerated the development of unmanned aerial vehicles, in particular by companies such as Palantir and Anduril.

The latter, along with General Atomics, were selected last year by the U.S. Air Force to build and test prototype drones for the next phase of the combat aviation program aimed at creating a fleet of unmanned aerial vehicles, the newspaper writes. The companies were chosen over Lockheed, Boeing and Northrop, in what was considered a turning point for the industry.

Even before the war in Ukraine, the FT recalls, the Pentagon had been working to diversify its industrial base. Two years ago, it created the Office of Strategic Capital, which provides private capital to companies with technological innovations that can be used for national security.

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“Under Trump, such efforts are expected to accelerate. His nominee for the second Pentagon job, billionaire investor Steven Feinberg, “comes from the Wall Street community, so he understands [venture capital-backed defense technology groups] and how they operate. That should help attract new opportunities from new players,” said Cynthia Cook, who heads the Defense Industrial Initiatives Group at the Center for Strategic and International Studies, a U.S. think tank.

It points to connections between future Trump team officials and tech billionaires. In particular, vice presidential candidate J.D. Vance has close ties to Thiel of Palantir. The publication writes:

“Some of the major defense groups have agreed to cooperate with new technology contractors, but given the ambitions of the latter, these relationships could well develop into full-scale competition.”

Chris Kubasik, chairman and CEO of L3Harris Technologies, which last year entered into a strategic partnership with Palantir, wrote a letter to Musk and other leaders proposing reforms to modernize America's defense ecosystem.