In 2024, US military equipment sales to foreign governments surged by 29% to a record US$318.7 billion (S$429 billion), according to the State Department on January 24. This spike in sales was driven by countries aiming to replenish supplies sent to Ukraine and prepare for potential conflicts.

The Biden administration's final year of figures suggest continued strong demand for US-made weapons, benefiting companies like Lockheed Martin, General Dynamics, and Northrop Grumman, whose stock prices are expected to rise amid increasing global instability.

During his presidential campaign, former President Donald Trump advocated for NATO allies to significantly increase defense spending, proposing that they allocate five percent of their GDP to defense, a sharp rise from the current two percent target, which no NATO country, including the US, meets.

Defense contractors are struggling to keep up with the surge in demand driven by Russia's invasion of Ukraine, as global defense ministries place large orders to replenish their stocks and the US looks to restore weapon supplies sent to Ukraine.

The US State Department highlighted that arms sales are a key foreign policy tool with potential long-term effects on regional and global security.

In 2024, approved sales included US$23 billion in F-16 jets and upgrades to Turkey, US$18.8 billion in F-15 fighter jets to Israel, and US$2.5 billion in M1A2 Abrams tanks to Romania. These orders are expected to bolster the order backlogs for US weapons manufacturers, who anticipate strong performance in the coming quarters due to rising demand for artillery, Patriot missile interceptors, and armored vehicles.

Foreign governments can purchase US arms through two main methods: direct commercial sales with companies or foreign military sales via government approval, typically coordinated through US embassy officials. In 2024, direct military sales totaled US$200.8 billion, up from US$157.5 billion in 2023, while sales arranged through the US government reached US$117.9 billion, an increase from US$80.9 billion in the previous year.

Disclaimer: This image is taken from Reuters file