Defense Trade and Arms Export Newsletter Highlights

Global Military Spending Reaches Record Highs – the Stockholm International Peace Research Institute (SIPRI) released its annual report analyzing trends in global military expenditures, which highlights that global spending rose by 2.9% to reach $2.9 trillion in 2025. SIPRI’s analysis notes that Europe was the main driver of the increase, with the highest level of expenditure SIPRI ever recorded for the continent. In 2025, European countries’ expenditure on defense rose 14% to $864 billion. Germany and Spain both crossed the 2% of GDP threshold and Poland spent 4.5% of its GDP on defense. Asia and Oceania’s combined expenditures rose 8.1% to $681 billion, with China reaching its 31st consecutive annual increase and Japan and Taiwan reaching new spending records.

EU Invests Over $1 Billion into Defense Research and Development – The European Commission released the results of the 2025 European Defense Fund (EDF) request for proposals and selected 57 collaborative research and development projects for a combined $1.26 billion in European Union (EU) funding. The selected projects include 634 entities from 26 EU member states and Norway, which will be divided into four separate initiatives focused on loitering munitions and affordable mass drone production.

Germany Releases Strategy to Be Europe’s Strongest Military by 2039 – Germany released the most comprehensive overhaul of Bundeswehr planning through a series of foundational strategic documents, including the first standalone military strategy, a new capability profile, a personnel growth plan and a redesigned reserve strategy. The strategy, named “Verantwortung für Europa” or “Responsibility for Europe,” identifies Russia as the primary threat and details scenarios for potential attacks on NATO territory. It also highlights a doctrinal shift that treats NATO territory, the Middle East and the Indo-Pacific as interconnected security spaces. Defense Minister Boris Pistorius noted specific interest in deep precision strike, air defense against hypersonic missiles and drone capabilities.

Japan Changes Longstanding Policy to Allow Foreign Military Sales – Prime Minister Sanae Takaichi announced that Japan will allow for the sale of Japan-made weapons overseas, reversing longstanding policies imposed after the end of World War II. The country will now be able to sell lethal weapons to 17 countries, including the Philippines and Indonesia. Japan will not export weapons to countries engaged in active conflicts, unless the government determines that there is a national security implication for Japan.

Australia to Increase Defense Spending to 3% of GDP – Australian Defense Minister Richard Marles announced the government’s plans to increase defense spending by 3% of GDP by 2033. The new target would see Australia spend an additional A$53 billion over the next 10 years when compared to its 2024 defense strategy. Original estimates of Australia’s defense spending forecast Australia raising its defense spending target to 2.3% of GDP by 2033. Australia will spend A$14 billion over the next four years, and it plans to change how it calculates the defense budget to match NATO definitions.

If you would like to discuss these stories or their implications on global defense trade, please reach out to one of the authors.