U.S. Policy Shifts in Response to Turkey's Geopolitical Moves: Assessing the Impact on Defense and Energy Sectors

The U.S. response to Turkey's evolving geopolitical role has become a focal point of transatlantic strategy, particularly in defense and energy sectors. As Turkey navigates its dual ambitions of regional dominance and NATO alignment, U.S. policy has shifted to balance strategic cooperation with geopolitical constraints. This analysis examines how recent U.S. initiatives-ranging from joint defense ventures to energy diversification efforts-reflect a recalibration of bilateral ties amid shifting global dynamics.

Defense Sector: From Sanctions to Strategic Partnerships

The U.S. defense relationship with Turkey has been marked by both friction and collaboration. Sanctions imposed after Turkey's 2019 acquisition of Russia's S-400 air defense system disrupted key projects, including the Turkish Utility Helicopter Program (TUHP) co-produced with Lockheed Martin. These restrictions forced a partial suspension of operations and, according to the Atlantic Council, a declaration of force majeure by Lockheed Martin in 2024. However, the Trump administration's emphasis on NATO burden-sharing has also spurred new opportunities. U.S. defense firms are increasingly partnering with Turkish manufacturers like Baykar and Aselsan to access European markets, leveraging Turkey's cost-effective industrial base, as Nordic Monitor reports.

A landmark $23 billion F-16 Aircraft Acquisition and Modernization deal finalized in 2024 underscores this shift. The agreement, which includes 40 new F-16 Block 70 aircraft and modernization kits for 79 existing jets, reflects Turkey's growing defense spending-projected to reach $22.8 billion in 2024 and grow at a 10% CAGR through 2029, according to GlobalData. Despite U.S. sanctions, Turkey continues to modernize its fleet domestically, blending U.S. technology with indigenous production.

Energy Sector: Diversification and Geopolitical Leverage

Turkey's energy strategy has long aimed to reduce reliance on Russian and Iranian imports, a goal the U.S. has actively supported. In September 2025, President Trump offered sanctions relief and F-35 program access in exchange for Turkey's pivot to U.S. and North African LNG suppliers, according to Steptoe. This incentive spurred Turkey to secure a 20-year LNG agreement with Mercuria and a nine-year deal with Australia's Woodside Energy, diversifying its supply routes.

U.S. energy firms have also deepened their footprint in Turkey's infrastructure. Partnerships like ExxonMobil-BOTAS and Continental Resources-TPAO highlight Turkey's role as a regional energy hub, facilitating Caspian and Eastern Mediterranean resources to Europe, as the Atlantic Council notes. The reopening of the Iraq-Turkey Pipeline and expansion of Trans-Caspian routes further solidify this position. By 2026, the Trans-Anatolian Natural Gas Pipeline (TANAP) is expected to reach 31 bcm annual capacity, aligning with U.S. interests in countering Russian influence, as Türkiye's International Energy Strategy outlines.

Economic Impacts and Trade Dynamics

Bilateral trade in 2023–2025 has been shaped by tariffs and strategic incentives. A 10% U.S. tariff on Turkish imports in April 2025, targeting textiles and steel, prompted retaliatory measures, including a 60.3% tariff on U.S. apples, according to The Global Statistics. Despite these barriers, U.S. exports to Turkey reached $7.41 billion in May 2025, outpacing imports ($6.79 billion) and creating a $614.2 million surplus. The textile sector, a key export category, saw 14% year-on-year growth, demonstrating resilience amid trade tensions.

Defense trade, however, remains the most dynamic segment. Turkey's defense exports surged to $7.15 billion in 2024, a 29% increase from 2023, driven by firms like Baykar and Turkish Aerospace Industries, according to Breaking Defense. U.S. equity inflows into Turkey's defense sector reached $6.48 billion in 2024, despite sanctions, as companies seek to access European procurement markets through Turkish partners (see Invest Turkey's defense and aerospace overview).

Challenges and Future Outlook

While U.S.-Turkey cooperation has expanded, challenges persist. Political instability in Turkey, including the aftermath of the 2023 earthquakes, and U.S. sanctions continue to deter investment. Additionally, Trump's proposed withdrawal from the Paris Agreement raises uncertainties for climate-linked energy projects, per Anadolu Agency coverage. Yet, both nations recognize mutual benefits: the U.S. seeks to maintain NATO influence, while Turkey aims to solidify its role as a regional energy and defense hub.

Conclusion

U.S. policy toward Turkey reflects a nuanced balance of competition and collaboration. In defense, joint ventures and F-16 deals signal a pragmatic embrace of Turkey's industrial capabilities, even as sanctions persist. In energy, U.S. incentives have accelerated Turkey's pivot away from Russian imports, aligning with broader transatlantic security goals. While challenges remain, the evolving partnership underscores the strategic importance of Turkey in a multipolar world.