As we look toward 2025, the defense trade landscape is set to evolve dramatically, driven by geopolitical shifts, regulatory reforms, and technological advancements. Defense Trade Solutions (DTS) is closely monitoring these trends to help the U.S. defense industry stay ahead. Here’s how we see the future of defense trade unfolding:
The ongoing and potential conflicts in Ukraine, Israel, and Taiwan are shaping defense export priorities. With the incoming Trump Administration, we anticipate continued and possibly increased arms transfers (FMS and DCS) to Israel and Taiwan. Additionally, while the Trump Administration intends to end Russia’s invasion of Ukraine, U.S. aid to Ukraine will likely continue for some time and focus on bolstering and re-supplying defensive capabilities. Even after, Ukraine will likely turn to FMS and DCS procurement with national funds from U.S. sources to strengthen its defensive posture. This surge in demand will require agile export strategies and efficient compliance processes.
As competition with China intensifies, the U.S. and its allies will emphasize greater interoperability and access to advanced U.S.-origin capabilities. Navigating Technology Security & Foreign Disclosure (TSFD) requirements and designing modular systems for exportability will become critical. Companies must be prepared to adapt their strategies to align with these evolving needs.
The AUKUS partnership will be in full effect, with anticipated reforms to reduce the Excluded Technologies List (ETL), streamline AUKUS Congressional Notification Requirements, and expedite export licenses for Australia, the UK, and Canada. This will boost demand for export activities among the three countries and create opportunities for industrial collaboration, elevating the level of technology accessible through FMS and DCS.
The Department of Defense (DoD) could push for streamlining the 13 TSFD Pipes, following the NDAA 918 Report. Simplifying these processes will enhance consistency and predictability, making it easier for companies to navigate export controls and expedite approvals.
Building on previous Trump Administration UAS export policy changes, we anticipate further reforms to reduce barriers for Missile Technology Control Regime (MTCR) exports. The “strong presumption of denial” for MTCR Category 1 systems may be relaxed for certain countries, opening new markets for U.S. defense exports.
The Trump Administration is likely to continue ITAR reforms, focusing on refining definitions and ensuring the U.S. Munitions List (USML) remains regularly updated with the pace of technology advancements. These changes aim to reduce regulatory burdens and enhance clarity for defense companies.
With many global trade leaders nearing retirement and a talent gap in junior to mid-career professionals, the defense industry faces a staffing challenge. Companies will need to invest in external resources or develop internal talent pipelines by training recent graduates in defense trade intricacies. Access to skilled professionals will be essential to meet growing international business demands.
As defense trade becomes more complex, companies must leverage automation tools like OCR EASE and AI solutions to streamline administrative tasks. This allows highly skilled professionals to focus on strategic knowledge work, enhancing efficiency and meeting increasing transaction volumes.
With a heightened focus on meeting CMMC compliance standards, robust cybersecurity is now a necessity. The U.S. Government will likely increase scrutiny on protecting Controlled Unclassified Information (CUI) and export-controlled data, extending stringent cybersecurity expectations to second and third-tier suppliers. Ensuring comprehensive cybersecurity practices will be critical for maintaining compliance and securing sensitive information.
As we move into 2025, the defense trade industry must navigate a rapidly changing landscape. From increasing export needs driven by global conflicts to regulatory reforms and technological innovations, staying ahead requires adaptability, innovation, and strategic foresight. DTS is committed to helping our clients thrive in this dynamic environment, ensuring their success aligns with U.S. national security and foreign policy objectives.
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