Europe and Canada Are Finally Saying No to the F-35 Stealth Fighter

Several European nations and Canada are reconsidering or canceling F-35 fighter jet acquisitions, driven by a desire for strategic autonomy, political friction with the US (including NATO spending demands and tariffs), and rising costs. Spain recently canceled its F-35 purchase, opting for European alternatives. Switzerland is reviewing its 36-jet deal following a "shocking" $1.3 billion price hike and new 39% US tariffs, while Canada's 88-jet deal is in "limbo" for 72 un-committed aircraft due to trade disputes and political tensions. This trend underscores a broader push to strengthen domestic defense industries and reduce reliance on US supply chains.

Analysis

The F-35 program, manufactured by Lockheed Martin (LMT), faces significant headwinds as key international partners reconsider or cancel orders, leading to a -0.7 sentiment score for LMT. Spain officially canceled its F-35 purchase in August 2025, opting for European alternatives. Switzerland is reviewing its 36-jet deal after a "shocking" $1.3 billion price hike and new 39% U.S. tariffs, while Canada's 88-jet deal has 72 un-committed jets in "limbo" due to trade disputes.

These decisions are primarily driven by a desire for "strategic autonomy" and to strengthen domestic defense industries, with nations like Spain prioritizing investment in European-based defense ecosystems. Political friction with the Trump administration, including demands for increased NATO spending and trade policies, has also fueled a backlash against US defense systems, raising concerns over US influence and reliability.

The shift towards European alternatives such as the Eurofighter Typhoon and the Future Combat Air System (FCAS) signals a broader trend of technological and industrial sovereignty. Concerns over the F-35's "sustainment monopoly" and potential US control over software and parts further motivate countries to reduce dependence on US supply chains, impacting future international sales for LMT.

Key Decisions for Investors

• Monitor Lockheed Martin's (LMT) F-35 international order book for further cancellations or reduced commitments, particularly from other allied nations.
• Evaluate the long-term implications of increased European defense industrial autonomy and the pivot to indigenous alternatives on US defense primes' international revenue streams.
• Assess geopolitical risks, including trade policies and political relations, as critical factors influencing future defense contract awards and supply chain stability.