The Trump wipeout in US Congress, while a long-term reason for optimism, increases immediate uncertainty. The winners of the changed dynamic are big European defence contractors.
As of 4 November, the Democratic Party was projected to have won both chambers of the US Congress, although some races and final margins were still being counted. The people most pleased by its gains in Washington may not be in Brussels. They may be in Düsseldorf, La Spezia, and Linköping.
European defence primes were already among the continent’s best-placed investments. The result has sharpened a thesis that investors have been building for a year. A hamstrung but unpredictable American president is the best sales pitch European arms-makers could ask for.
A favourable result is an opportunity to act, not an excuse to wait. — Waya Quiviger, IE University
Start with Rheinmetall. The German group aims to make 1.5m artillery shells a year by 2030, and it has a backlog of about €64bn. It has also scrubbed American components—which are subject to ITAR export rules—from its core land systems. Germany has lifted its debt brake for military procurement. A company that does not need Washington’s permission to ship tanks is worth more when Washington’s behaviour looks ever more erratic.
The European Investment Bank (EIB) is the reason Rheinmetall’s expansion can be financed at pace. An analysis from Bocconi University traces the bank’s role in the defence push. Analysts’ stock-picking guides make the same point about the sector. The EIB was long barred from lending for weapons and ammunition. It could finance only dual-use kit, such as civilian drones or radars with a secondary military application. The taboo is disappearing fast.
Why the bank matters
The EIB bank is in the process of creating a Defence Equity Facility. It would lend directly for ammunition foundries, missile plants, and armoured-vehicle assembly lines. The bank’s own capital is the smaller part of the story. Commercial lenders and pension funds have shunned defence for years, citing environmental, social, and governance (ESG) rules.
By treating defence spending as socially sustainable, the EIB gives them cover to return. The expected result is a wave of private refinancing for mid-sized contractors. The midterms did not create these rules. What they changed is the political arithmetic.
Brussels spent 2025 and 2026 asking what happens if America abandons the NATO spirit. A Democratic Congress makes a sudden American de facto exit from the Alliance less likely, but it does not make the White House more reliable, either. Europe’s planners may well treat the result as a window to lock in changes, not as a reason to slow them.
The beneficiaries beyond Düsseldorf
There are other companies standing to benefit. Leonardo of Italy owns half of a joint venture with Rheinmetall. The venture recently won contracts worth $4.16bn from the Italian army for armoured vehicles and new tanks. It is the kind of cross-border project that the EU’s new funding schemes are designed to favour. Annual revenues could reach €4bn.
Thales of France is deep in the digital play. The European Commission chose its TrustNest R-Cloud platform for a pilot. The pilot gives secure collaboration tools to European Defence Fund projects. Russian grey-zone campaigns of sabotage and hacking are growing. So is demand for sovereign cloud, cyber-defence, and electronic warfare.
This makes Europe realise that we are at the beginning of the end of the Trump era, and it probably leads to a stronger determination not to make certain concessions and not to yield as much. — Max Bergmann, Centre for Strategic and International Studies
Saab of Sweden is the speed merchant. Its order backlog has reached SEK364bn (approx. €33,2bn). Organic sales grew 30.6 per cent. Third-quarter orders jumped 216 per cent to SEK65.8bn (€6bn). Front-line states such as Poland and the Baltics want weapons they can have next year, not in 2030. Saab can deliver them, although Paris grumbles that Saab is not part of a fully integrated European architecture.
The changing landscape
Several pieces of legislation take on a new meaning after the US vote. The €150bn Security Action for Europe (SAFE) loan scheme is the clearest. It lets governments borrow on EU-backed terms for joint procurement. Its money is going to the strategic enablers that Europe once outsourced to America. These include air-to-air refuelling, heavy airlift such as the Airbus A400M, and spy satellites.
The midterms will probably speed up drawdowns by front-line states. They will also deepen a quarrel over what counts as European. Poland and Romania want to spend SAFE money on quick purchases from South Korea or on existing American contracts. France and Germany want it kept for European platforms. The European Defence Industry Programme (EDIP) caps non-EU components at 35 per cent for its €1.5bn grant pool.
If US President Donald Trump, frustrated at home, uses export licences as a lever in trade talks, Brussels is likely to enforce the cap hard. That would push arms-makers towards ITAR-free production lines. The Emergency Security Protocol is still pending. It would act as a civil-military emergency button under Article 122 of the EU treaty.
It would unlock a joint logistics command, waive state-aid limits, and exempt military production from taxes. Member states have resisted giving the Commission control of emergency stockpiles. The memos suggest the post-midterm fear of an unreliable America may break that deadlock. They point to passage by early 2027. Other measures are already in motion.
The strategic picture
The Defence Readiness Omnibus V package passed in October. It cuts red tape for the European Defence Fund, speeds up permits for arms factories, and adjusts chemicals rules so that REACH does not hobble ammunition output. The proposed EMERSE framework would create what they call ‘a military Schengen’. It would replace multi-week transport permits with a six-hour border notification.
Its logic is obvious once the Pentagon’s force-posture review lands. If American logistics help is to be less reliable, Europe must move its own armour east. None of this means a Democratic Congress is irrelevant. It means its powers are narrower than Europeans hope. Congress can investigate, bargain over spending, and, with the Senate, influence appointments.
What will the character of the Democratic Party look like in the coming years? (…) It will significantly shape whom European leaders choose to emulate. — Javier Carbonell, European Policy Centre
The president keeps his veto. Overriding it needs two-thirds of both chambers. The Conversation’s analysis notes that even full Democratic control would leave Mr Trump’s veto intact. He could keep resorting to executive orders. Mr Trump may also be less restrained abroad.
No stability ahead
MEP Brando Benifei (S&D/ITA), who chairs the European Parliament’s delegation for relations with America, told reporters: “We always hope there will be greater stability and predictability. However, we know that if Trump loses control of Congress, he could focus even more heavily on foreign policy.” The precedent is not comforting. After losing both chambers in 2006, George W. Bush sent more than 20,000 extra troops to Iraq.
The Pentagon’s force-posture review, expected by December, is the main test. It is likely to formalise what Elbridge Colby, Mr Trump’s Pentagon strategist, calls NATO 3.0. That means European ownership of conventional defence, less dependence on American capabilities, and resources freed for the Indo-Pacific. Congress has set a statutory floor of 76,000 American troops in Europe, against about 80,000 now.
The president disputes its legality. The courts are unlikely to settle the matter within two years. The war in Iran adds pressure. Depleted stocks of Patriot interceptors may mean that orders meant for allies are diverted. There is also a hard lesson in the Starshield episode, in which speed limits reportedly disrupted Ukrainian drone operations. Money alone will not fix this.
Lessons that money cannot buy
Europe’s dependence on American communications, intelligence, and air defence cannot be legislated away from Washington. Hence the muted mood in Brussels. Max Bergmann of the Centre for Strategic and International Studies reads the result as a psychological shift: “This makes Europe realise that we are at the beginning of the end of the Trump era, and it probably leads to a stronger determination not to make certain concessions and not to yield as much.”
The European Council on Foreign Relations (ECFR) is blunter about timing: “A Democratic win in the midterms could matter enormously in the long term but change very little in the short term.” It urges Europeans to court the next generation of Democrats, including centrists like Gavin Newsom or Pete Buttigieg, and hard left-wingers like Alexandria Ocasio-Cortez. It notes that European affairs barely feature in the party’s foreign-policy debates.
We know that if Trump loses control of Congress, he could focus even more heavily on foreign policy. — MEP Brando Benifei (S&D/ITA)
Businesses may hope for a calmer trading relationship. They should not count on one. Congress holds constitutional authority over tariffs but has delegated much of it to the president. A new majority does not undo that. The Supreme Court ruled earlier this year that Mr Trump overstepped on some tariffs. A Democratic Congress will cite that ruling in refusing statutory backing for new ones.
However, he can reach for other legal bases. Assuming that opposition to Mr Trump means agreement with Europe may well be mistaken. On industrial competition, advanced technology, and China, American lawmakers’ interests diverge from Europe’s. As usual, EU member state governments seeking individual exemptions weaken everyone’s hand.
Politics at home
The midterms also feed into Europe’s own politics. The administration has courted European far-right parties. ECFR expects that to intensify as a part of the culture war. US Vice-President James Vance has already cited riots in France to warn what a Democratic victory would bring America. A rebuff for Mr Trump at the polls may cheer European liberals and centrists, even if it changes little on the ground.
Europe’s left is watching the Democrats for different reasons. Javier Carbonell of the European Policy Centre says: “What will the character of the Democratic Party look like in the coming years? That remains a major unknown, and I believe that is where the greatest impact will lie. It will significantly shape whom European leaders choose to emulate.” Socialist parties from Spain to Denmark are choosing between a more populist-left platform and more right-leaning policies.
The most useful reading of the midterms is a warning against complacency. Corina Stratulat, also of the European Policy Centre, says: “A continent that disagrees on institutional reform, hesitates on defence and enlargement, and procrastinates on addressing the economic, technological and demographic revolutions ahead cannot blame the weather for being wet. Geopolitics is not mood management; it is preparation.”
The Democrats have thus bought Europe a reason for optimism, but nothing resembling an immediate rescue. As global governance scholar Waya Quiviger puts it in a piece for the US publication The Conversation: “A favourable result is an opportunity to act, not an excuse to wait.” That applies to the sensible on both Atlantic coasts.
