U.S. Defense Export Booms: Strategic Implications for RTX Corp and Defense Investors

The U.S. defense export sector has entered a new era of dominance, driven by geopolitical tensions, modernization demands, and a global arms market increasingly tilted toward Western suppliers. In 2024, U.S. arms exports surged to $42.329 billion, capturing 37.92% of the global market—a 21% increase from 2020 and solidifying its 43% share of major arms exports between 2020 and 2024 [1]. This boom is not merely a function of supply but a reflection of strategic alignment with allies and adversaries alike. For defense investors, the implications are clear: companies like RTX Corporation, a titan in the defense-industrial complex, are poised to benefit from this trend—though not without navigating significant compliance and geopolitical risks.

The Geopolitical Engine Behind the Boom

The U.S. arms export surge is underpinned by a dual strategy of reinforcing NATO allies and countering Russian influence. European NATO members, which received 64% of U.S. arms imports between 2020 and 2024, remain critical to this strategy [1]. For instance, Turkey’s $23 billion F-16 upgrade package and Romania’s $2.5 billion M1A2 Abrams tank purchase underscore Washington’s commitment to bolstering regional security [2]. Meanwhile, the collapse of Russian arms exports—down 64% since 2020 due to sanctions and domestic resource reallocation—has created a vacuum that U.S. firms are filling [1].

Asia, too, is a growth engine. Japan’s $1.06 billion in 2023 TIV and $14 billion in 2024 exports, alongside Qatar’s $85 billion in U.S. weapons, highlight the pivot to the Indo-Pacific and Middle East [3]. These sales are not just about hardware; they are about embedding U.S. technology and interoperability standards into allied militaries, ensuring long-term strategic cohesion.

RTX Corp: A Case Study in Resilience and Risk

RTX Corporation, parent company of Raytheon Technologies, is a linchpin in this export boom. Its Raytheon segment secured $1.1 billion for AIM-9X missiles and $250 million for Japan’s ESSM Block 2 production in 2025 [4]. These contracts align with global demand for precision-guided systems and air defense, areas where RTX holds a dominant position. The company’s $236 billion contract backlog—driven by programs like hypersonic missiles and the Next-Generation Air Dominance initiative—further cements its role in the defense-industrial base [5].

However, RTX’s success is shadowed by compliance challenges. A $200 million settlement with the U.S. Department of State for 750 AECA/ITAR violations (2017–2023) and a $950 million resolution for foreign bribery and defective pricing schemes reveal systemic risks [6]. These incidents, while costly, also highlight the U.S. government’s tightening grip on export controls—a trend that could raise operational costs for defense firms.

Financial Performance and Investor Considerations

RTX’s Q2 2025 results reflect the duality of its position. The company reported $21.6 billion in sales, a 9% year-over-year increase, driven by Collins Aerospace’s 13% defense sales growth and Raytheon’s 8% rise in international demand for Patriot and NASAMS systems [7]. Yet, its 2025 adjusted EPS forecast was cut to $5.80–$5.95 per share, citing tariff impacts and tax changes [8]. This volatility underscores the tension between robust demand and external headwinds, such as trade policies and supply chain disruptions.

For investors, the key question is whether RTX can balance its export-driven growth with compliance costs. The company’s leadership in high-growth areas like hypersonics and air dominance programs suggests long-term potential, but short-term risks—such as the SEC’s $124 million FCPA settlement—remain [9].

Strategic Implications for the Defense Sector

The U.S. defense export boom is a testament to the resilience of its industrial base, but it also raises ethical and strategic questions. As allies increasingly rely on U.S. systems, the risk of over-dependence on a single supplier grows. For RTX and peers, this creates both opportunities and vulnerabilities: while contracts with democracies like Japan and Qatar are stable, sales to authoritarian regimes (e.g., Saudi Arabia) invite scrutiny over human rights and conflict escalation.

Investors must also consider the geopolitical lifecycle. The current boom is fueled by conflicts in Ukraine and the Middle East, but shifts in global stability could alter demand. Diversifying export markets and investing in dual-use technologies (e.g., AI, cybersecurity) may mitigate this risk.

Conclusion

The U.S. defense export boom is a strategic and financial juggernaut, driven by geopolitical alignment and technological superiority. RTX Corp, with its robust backlog and leadership in critical programs, is well-positioned to capitalize on this trend. However, compliance challenges and external headwinds necessitate a cautious approach. For defense investors, the path forward lies in balancing the sector’s growth potential with its inherent risks—a calculus that will define the next decade of global arms trade.

Source:
[1] Global arms exports in 2024 and for the period 2021-2024 [https://vpk.name/en/987775_global-arms-exports-in-2024-and-for-the-period-2021-2024.html]
[2] U.S. arms exports hit record high in fiscal 2023 [https://www.reuters.com/business/aerospace-defense/us-arms-exports-hit-record-high-fiscal-2023-2024-01-29/]
[3] U.S. controls 43% of global arms exports [https://defence-blog.com/us-controls-43-of-global-arms-exports/]
[4] RTX's Missile Sales Soar With Key Wins in U.S. Defense [https://finance.yahoo.com/news/rtxs-missile-sales-soar-key-142000818.html]
[5] RTX Corporation (RTX) Stock: A Strategic Buy for Defense [https://www.ainvest.com/news/rtx-corporation-rtx-stock-strategic-buy-defense-aerospace-growth-2025-2026-2508/]
[6] U.S. Department of State Concludes $200 Million Settlement Resolving Export Violations by RTX Corporation [https://2021-2025.state.gov/u-s-department-of-state-concludes-200-million-settlement-resolving-export-violations-by-rtx-corporation/]
[7] RTX reports Q2 2025 results [https://www.rtx.com/news/news-center/2025/07/22/rtx-reports-q2-2025-results-]
[8] RTX cuts 2025 profit forecast as tariff costs weigh [https://www.reuters.com/business/aerospace-defense/rtx-cuts-2025-profit-forecast-tariff-costs-weigh-2025-07-22/]
[9] SEC Charges Virginia-Based RTX Corp. with Violating Foreign Corrupt Practices Act [https://www.sec.gov/newsroom/press-releases/2024-171]