Pentagon: US State Department approves potential sale of defense system to Egypt

Defense is big business—and under the Trump administration, it's also a central piece of the geopolitical and economic strategy. While the president often speaks of peace, there's no denying that a bit of conflict can be good for business—especially the defense business.

High-ticket exports like military hardware, aircraft, and recurring commodities like oil serve a dual purpose. Not only do they support U.S. manufacturers and defense contractors, but they also give countries a path to reduce trade tensions. Nations that buy big from the U.S. may gain goodwill—or at least bargaining power—when it comes to securing lower tariffs on other goods they export to the U.S. These purchases can also help narrow trade deficits, which remain a key focus of Trump’s economic agenda.

Today, the Pentagon confirmed that the U.S. State Department has approved a potential $4.67 billion sale of a National Advanced Surface-to-Air Missile System (NASAMS) to Egypt. Ironically, the U.S. already runs a trade surplus with Egypt—exporting about $6.1 billion in goods to Cairo while importing only $2.5 billion as of 2024.

Meanwhile, pressure is mounting on allies like the European Union, which Trump has repeatedly accused of freeloading on U.S. defense support. The EU has started to spend more on defense and may continue increasing purchases—especially if it believes doing so will preserve or reduce tariffs on exports to the U.S.

The market has taken notice. The iShares U.S. Aerospace & Defense ETF (ITA)—which tracks major players in the sector—has soared. Since bottoming in April, the ETF is up 53.67%, and it’s gained 36% year-to-date, reflecting strong investor confidence in the sector's outlook.

Looking at the longer term, the 5 year chart above is showing the acceleration.

The top 10 holdings account for approximately 75% of total assets, making the fund relatively concentrated in major defense and aerospace names: