US Election 2024: The Stakes for NATO and the Defence Industry

Published Date: October 31, 2024 | Author: Tom Bailey

With the US presidential election approaching, investors and analysts are scrutinising the potential outcomes and their implications for the global defence landscape. As the race tightens, the key candidates—Kamala Harris and Donald Trump—seemingly present starkly different visions for US security policy and NATO commitments. Here, we explore what each candidate’s approach might mean for the defence theme, NATO, and the European security infrastructure.

Trump’s Potential Return: A Shift in Global Security Commitments

Donald Trump speaking as President of the US at a NATO summit

During his first term, Trump withdrew from several international agreements, including the Paris Climate Agreement and the Iran nuclear deal, causing concerns among allies. Notably, Trump often questioned NATO’s purpose and implied that US support could wane for members not meeting their financial commitments. For Europe, this raised the unsettling prospect of diminished US involvement in NATO.

Trump has even floated the idea of a “Two-Tiered NATO System,” wherein countries not reaching the 2% GDP defence spending target would face reduced protections under NATO’s Article 5. This could leave some European countries vulnerable, with Trump suggesting he’d allow Russia to “do whatever they want” with nations that lagged on spending.

A return of Trump to the White House could revive these pressures, intensifying efforts among European countries to “Trump-proof” their defences. That said, this trend has already accelerated, with NATO allies significantly increasing defence budgets. In 2024, 23 Allies are expected to meet or exceed the target of investing at least 2% of GDP in defence, compared to only three Allies in 2014, as Europe’s pivot toward self-reliant security has gained traction. As a result, European defence companies stand to benefit from this move toward a more autonomous defence structure.

Ukraine: A Test for US Commitment and European Resilience

Trump’s stance on Ukraine is another focal point. He has pledged to end US aid to Ukraine, proposing a negotiated “peace deal” with Putin. While this could lead to a swift conclusion to the war, it also raises questions about his commitment to European security. The war in Ukraine has been a major driver of growth in the defence sector; however, even if hostilities ceased, the geopolitical environment that emerged post-2022 is unlikely to revert to its previous state. European leaders have recognized the renewed role of military strength in the region.

Kamala Harris: Continuity and NATO Commitment

In contrast, Kamala Harris is positioned as the continuity candidate. A strong advocate for NATO, Harris has called it “the greatest military alliance the world has ever known.” Given her role as Vice President under Biden, her policies are expected to align closely with the current administration’s pro-NATO stance. Jane Edmondson, Head of Thematics at VettaFi, notes that Harris’s approach to NATO and Ukraine would likely extend Biden’s supportive policies.

Nevertheless, a Harris administration does not necessarily signal that Europe can roll back its recent defence spending increases. Trump’s questioning of NATO’s value has resonated with a portion of the US electorate, and there’s no guarantee that future administrations won’t revisit the issue. The long-term security of Europe will depend on its capacity to withstand political shifts in US leadership, which is why many European nations have committed to a stronger, self-sufficient defence.

Strategic Autonomy and European Defence Integration

The reality of reduced US troop presence in Europe since the Cold War has also been a factor, independent of current questions surrounding the US election. By 2024, the US Army presence in Europe has fallen to a fraction of its Cold War levels, and this trend is unlikely to reverse. The concept of “strategic autonomy” has taken root among EU nations, reflecting a desire for greater independence on foreign policy.

In light of this geopolitical landscape, the EU is implementing a new defence industrial strategy to better integrate defence procurement and capabilities. This effort aims to increase Europe’s collective security and resilience, with leaders acknowledging the need for self-reliance in uncertain times. For the first time in decades, European countries are showing a willingness to adapt their defence policies, though they face significant challenges around funding and balancing national sovereignty.

The Road Ahead for NATO and Defence Investment

The outcome of the US election will not necessarily mark a turning point for the defence theme, particularly in Europe. Trump’s “tough love” could see European nations continue to bolster their defence independently. But European nations are aware acutely aware of the risk of a more isolationist US either following the election or in the future. Regardless of who wins, the political climate around defence and security has fundamentally shifted.

As Europe moves towards a more autonomous security strategy, the implications for defence companies are significant.

Why the Nuclear Sector May Have Room to Grow

October 2026

US Election 2024: The Stakes for NATO and the Defence Industry

Trump’s Potential Return: A Shift in Global Security Commitments

Ukraine: A Test for US Commitment and European Resilience

Kamala Harris: Continuity and NATO Commitment

Strategic Autonomy and European Defence Integration

The Road Ahead for NATO and Defence Investment

Related Funds

More Articles

Investment Strategies

About Us

Resources

Leaving HANetf's Website