U.S.-Turkey Defense Ties and Geopolitical Realignments: Defense Sector Opportunities Amid Trump's Sanctions Shift

The U.S.-Turkey defense relationship in 2025 is undergoing a pivotal recalibration, driven by shifting geopolitical priorities and the return of a Trump administration. After years of friction over Turkey's 2019 purchase of Russia's S-400 missile system, recent diplomatic engagements between President Donald Trump and Turkish President Recep Tayyip Erdoğan signal a potential thaw. This development has sparked renewed interest in the defense sector, with investors and analysts scrutinizing the implications for U.S. firms, Turkish defense modernization, and regional security dynamics.

Sanctions Easing and Strategic Realignment

The Trump administration's transactional approach to foreign policy has created an opening to revisit sanctions imposed under the Countering America's Adversaries Through Sanctions Act (CAATSA). According to a report by Modern Diplomacy, Erdoğan's first White House visit in six years has focused on restoring Turkey's access to U.S. defense technology, particularly the F-35 Joint Strike Fighter program, which was suspended in 2020 due to the S-400 acquisition U.S.–Turkey Defense Talks: Erdogan’s Push for F-35s Tests …, [https://moderndiplomacy.eu/2025/09/25/u-s-turkey-defense-talks-erdogans-push-for-f-35s-tests-sanctions-and-alliance-politics/]^[1]. Trump's willingness to prioritize bilateral deals over ideological consistency has emboldened Ankara, which now anticipates sanctions relief and potential F-35 sales U.S.–Turkey Defense Talks: Erdogan’s Push for F-35s Tests …, [https://moderndiplomacy.eu/2025/09/25/u-s-turkey-defense-talks-erdogans-push-for-f-35s-tests-sanctions-and-alliance-politics/]^[1].

However, legal and political hurdles remain. Selling F-35s to Turkey would require congressional approval, and U.S. allies like Greece and Israel have raised objections, fearing destabilization in the Eastern Mediterranean U.S.–Turkey Defense Talks: Erdogan’s Push for F-35s Tests …, [https://moderndiplomacy.eu/2025/09/25/u-s-turkey-defense-talks-erdogans-push-for-f-35s-tests-sanctions-and-alliance-politics/]^[1]. Despite this, the administration is reportedly considering alternatives, such as F-16 modernization packages and draft agreements for new F-16 sales, which could bypass some legal constraints U.S.–Turkey Defense Talks: Erdogan’s Push for F-35s Tests …, [https://moderndiplomacy.eu/2025/09/25/u-s-turkey-defense-talks-erdogans-push-for-f-35s-tests-sanctions-and-alliance-politics/]^[1].

Defense Contracts and Market Impacts

Recent contracts highlight the evolving landscape. The U.S. Defense Security Cooperation Agency approved a $225 million sale of 53 AIM-120C-8 Advanced Medium-Range Air-to-Air Missiles to Turkey, aimed at bolstering its air defense capabilities Turkiye to buy Advanced Medium-Range Air-to-Air Missiles, [https://www.business-standard.com/world-news/turkey-us-arms-deal-2025-missile-defense-cooperation-125051500687_1.html]^[2]. Separately, a $23 billion agreement for 40 F-16 Block 70 aircraft and modernization kits for 79 existing jets has been greenlit, with deliveries expected to begin in 2026 What are the main disputes between Turkey and the United States, [https://www.reuters.com/business/aerospace-defense/main-disputes-between-turkey-united-states-trump-meets-erdogan-2025-09-25/]^[4]. These deals underscore Turkey's commitment to modernizing its military while navigating U.S. sanctions.

Yet, the sanctions have had profound ripple effects. The Turkish Utility Helicopter Program (TUHP), a joint venture between Lockheed Martin and Turkish Aerospace Industries (TAI), has been disrupted by export license restrictions. As stated by Nordic Monitor, Lockheed Martin reported in its 2024 financial report that the program's delays and partial suspension have caused significant financial losses, with potential long-term impacts on its regional operations US sanctions on Turkey's defense sector, [https://nordicmonitor.com/2025/04/us-sanctions-on-turkeys-defense-sector-deliver-deeper-blow-widening-ripple-effects/]^[3].

Strategic Diversification and Indigenous Development

Turkey's defense sector is also pivoting toward self-reliance. The country has accelerated development of its indigenous Kaan fifth-generation fighter jet and is exploring Eurofighter Typhoon acquisitions from European partners What are the main disputes between Turkey and the United States, [https://www.reuters.com/business/aerospace-defense/main-disputes-between-turkey-united-states-trump-meets-erdogan-2025-09-25/]^[4]. These moves reflect a broader strategy to reduce dependency on U.S. systems while maintaining access to critical technologies. Meanwhile, the U.S. is recalibrating its approach, with Trump reportedly weighing measures to mitigate the S-400's impact, such as deactivating or relocating the systems Trump Reportedly Weighing End to Sanctions on Turkey, F-35 …, [https://newsaboutturkey.com/2025/03/23/trump-reportedly-weighing-end-to-sanctions-on-turkey-fighter-f-35-sales-back-on-the-table/]^[5].

Risks and Regional Tensions

Despite optimism, challenges persist. The U.S. Congress remains a wildcard, with lawmakers likely to resist sanctions relief due to concerns about Russian intelligence access to F-35 data US sanctions on Turkey's defense sector, [https://nordicmonitor.com/2025/04/us-sanctions-on-turkeys-defense-sector-deliver-deeper-blow-widening-ripple-effects/]^[3]. Additionally, regional tensions—particularly with Greece and Israel—could complicate U.S.-Turkey cooperation. For investors, these uncertainties highlight the need for caution, even as defense contracts present lucrative opportunities.

Conclusion

The U.S.-Turkey defense relationship is at a crossroads, shaped by Trump's pragmatic diplomacy and Turkey's strategic diversification. While sanctions relief could unlock billions in contracts and revive stalled projects, geopolitical risks and congressional resistance remain significant. For investors, the key lies in balancing the potential of high-value defense deals with the volatility of a shifting geopolitical landscape.