How Trump's Ukraine military aid halt affects US defense industry
WASHINGTON, March 4 (Reuters) - U.S. President Donald Trump has frozen military aid to Ukraine, just days after publicly confronting Ukrainian President Volodymyr Zelenskiy at the White House and accusing him of being insufficiently grateful for Washington's backing.
The halt to U.S. military aid does not only have significant implications for the three-year-old war between Ukraine and Russian invasion forces. It will also impact the U.S. defense industry. Here's how:
HOW MUCH HAS THE U.S. SPENT ON MILITARY AID FOR UKRAINE?
The United States has pledged and spent at least $65 billion on military aid for Ukraine since Russia's full-blown February 2022 invasion. Primarily, that assistance has been allocated through two tools: the Presidential Drawdown Authority (PDA) and the Ukraine Security Assistance Initiative (USAI).
WHAT IS THE PRESIDENTIAL DRAWDOWN AUTHORITY?
More than $31 billion worth of weapons and equipment has been pledged to Ukraine under the Presidential Drawdown Authority (PDA), which allows the president to approve rapid transfers to foreign countries from U.S. military stockpiles, without having to seek congressional approval.
More than $20 billion worth of weapons and equipment has already been shipped this way, according to a Reuters analysis.
Ukraine is still awaiting a large shipment of armored vehicles that are not set to be delivered until mid-2025, said a Ukrainian official, speaking on condition of anonymity. They are currently being refurbished at depots in Europe.
WHAT IS THE UKRAINE SECURITY ASSISTANCE INITIATIVE?
The U.S. has bought nearly $33.2 billion worth of new arms and military equipment for Kyiv directly from U.S. and allied defense contractors. That money was allocated by Congress.
The USAI is a longer-term approach to arming Ukraine. It will take years for all these weapons to be manufactured and shipped to the battlefield. This category of weapon provides Ukraine a sustained pipeline of modern weaponry and simultaneously sustained revenue for manufacturers.
The amount of aid that still needs to be delivered from the American contracts is "significantly less than 15 percent", a Ukrainian official said. Some of the weapons still to be delivered include advanced rocket launchers and missiles.
HOW DOES THIS AFFECT U.S. COMPANIES?
The halt to USAI not only impacts current orders, but also future production plans and investment decisions for U.S. companies such as L3Harris Technologies (LHX.N), opens new tab, Lockheed Martin Corp (LMT.N), opens new tab, RTX Corp (RTX.N), opens new tab and General Dynamics (GD.N), opens new tab.
It's unlikely that the U.S. government would cancel the orders for Ukraine that have not yet been delivered. It could decide to keep those weapons for itself.
Washington needs to replenish its own stocks and - instead of placing new orders - could instead keep the weapons that were bound for Ukraine, essentially reducing the future amount of new contracts on offer to U.S. companies.
WHAT WEAPONS HAVE BEEN DELIVERED TO UKRAINE?
Among the weapons and equipment provided during the war are U.S.-made F-16 fighter jets, long-range ATACM missiles, High Mobility Artillery Rocket Systems (HIMARS), the Guided Multiple Launch Rocket System (GMLRS), short-range air defense interceptors, replacement vehicles, air-to-ground munitions, and artillery.
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