US Threatens to Pull Buy American Waivers as Europe Writes 'Buy European' Into Defence Spending
On 15 September 2026 the United States sent EU lawmakers a paper warning that it “will review all potential response measures” if the EU writes a European preference into its next long-term budget. One of the measures on the table: rolling back the Buy American waivers that let European defence companies compete for Pentagon contracts.
Nineteen of the EU’s 27 member states have Reciprocal Defense Procurement agreements with the US. Under them, American buyers waive Buy American rules for those countries’ firms, and the countries do the same for US firms. Washington is now signalling that the deal works only if Europe keeps buying American too.
What Europe is doing
Europe is spending much more on defence and wants more of the money to stay at home. The clearest example is SAFE, the EU’s €150 billion defence loan programme adopted in May 2025. Components from outside the EU, the EEA, EFTA and Ukraine can make up no more than 35% of a product’s cost. Buying from American producers would need a separate EU agreement with the US, approved unanimously, and none exists. The same rule applies to the EU’s €90 billion loan to Ukraine. The first SAFE wave, approved in January 2026, covered eight countries and about €38 billion.
The September paper targets something bigger: European-preference rules in the EU’s 2028 to 2034 budget, including a planned €402 billion competitiveness fund. The US proposed “made with Europe” or “made in NATO” instead, which would count American content.
It wasn’t the first warning. In February 2026 the Defense Department, with the State Department, told the Commission it strongly opposed changes to EU defence procurement rules that would limit US industry. It argued a preference would breach the 2025 EU–US trade deal, in which the EU pledged to buy more American defence equipment.
What’s at stake for US industry
American arms sales are at record levels. Foreign Military Sales, government-to-government deals, totalled $104.4 billion in fiscal 2025, and direct commercial sales another $226.8 billion. Europe is a large part of that. A French institute estimated that 63% of European defence orders between February 2022 and mid-2023 went to US suppliers, though the Brussels think tank Bruegel couldn’t reproduce the figure.
Some purchases keep coming. Denmark ordered 16 more F-35s in October 2025, taking its fleet to 43. Germany is funding a $3.7 billion Patriot interceptor deal for Ukraine. Allies have put $6.7 billion into PURL, the scheme that buys US weapons for Ukraine. But the same Denmark chose a Franco-Italian air defence system over Patriot, and Spain ruled out the F-35 in favour of European aircraft.
Who has leverage
Both sides do. Europe wants American systems it can’t yet replace: fighters, long-range air defence, intelligence. The US wants the orders and the European supply chains that feed its own production. Pulling waivers would hurt European firms that sell to the Pentagon. It would also invite Europe to close its market faster.
Washington has used Buy American rules since 1933. Europe is now building its own version. The fight is over how much each side’s preferences should bend for allies, and whether “made in NATO” becomes the compromise.