European defense firms appear set to profit from a massive EU investment in armaments, as the bloc reacts to a U.S. pivot away from Europe’s security under President Donald Trump.

The $860 billion “ReArm Europe Plan” faces opposition, however, from Hungary, which argues the effort to continue arming Ukraine in its war against Russian invaders could bankrupt the EU.

Stock gains

Several European defense stocks have recorded huge gains in recent weeks, bucking the general nervousness in global markets over a potential trade war triggered by U.S. tariffs.

Germany’s Rheinmetall, which makes the widely used Leopard tank, has seen its stock jump almost 90 percent since the start of the year. Shares in British arms maker BAE Systems are up over a third, while Italy’s Leonardo and the French firm Thales have also risen sharply.

Europe is pushing to bolster its own defenses after Washington indicated that European security would no longer be a priority, explained Tim Oechsner, a senior trader at Germany’s Wolfgang Steubing AG bank.

“The stock market has also realized that Europe is more on its own and has to defend itself accordingly — and that the USA has taken a back seat as a reliable partner. In this respect, armaments and defense spending are forecast to be higher and the values are set correspondingly higher,” Oechsner told Reuters.

ReArm Europe Plan

U.S. President Donald Trump has long called on Europe to spend more on its own defense, arguing that Washington should no longer foot the bill.

Meeting in Brussels Thursday, European Union leaders, alongside Ukrainian President Volodymyr Zelenskyy, approved the $860 billion “ReArm Europe Plan,” which will be funded by EU bonds and relaxed rules on borrowing and spending.

The bloc has shown in the past that it has the capacity to act fast, said Mattia Nelles of the Dusseldorf-based consultancy the German-Ukrainian Bureau.

“The money is less of an issue than the resolve. We saw after corona, after COVID, that Europe and the EU were quickly able to mobilize hundreds of billions of euros,” he told VOA.

In addition to the EU plans, individual nation-states are also ramping up defense spending. Friedrich Merz, who is expected to be Germany’s next chancellor after his Christian Democrats won the largest share of votes in last month’s election, pledged to relax the nation’s strict borrowing rules, known as the “debt brake.”

“I want to be very clear here. The concept of ‘whatever it takes’ must also go for our defense now, in view of the threats to our freedom and to peace on our continent,” Merz told reporters in Berlin this week.

The Trump administration’s decision to halt military aid to Ukraine and restrict the use of some American-made weapons is driving Europe’s desire to build up its own capabilities.

As the share prices of many European arms companies have climbed this year, prices for several American defense firms have declined.

“It is important that the money we spend at least stays in Europe. We shouldn't be buying American weapons systems with it,” said Robert Halver, head of capital markets analysis at Germany’s Baader Bank, in an interview with Reuters.

Ukraine support

European leaders also pledged to continue supporting Ukraine. In a five-point plan agreed to Thursday, the EU committed to providing Ukraine with $33 billion in aid this year and affirmed that there should be no ceasefire negotiations without Ukrainian officials present.

But can the continent strengthen its defenses while supporting Kyiv’s forces in its war against the Russian invasion? Mark Galeotti, executive director of Mayak Intelligence and an author on Russia, said Europe’s rearmament will take time.

“Most of this cannot actually affect the situation on the ground, for months or indeed years to come,” he said. “You do not build a defense-industrial complex overnight. This is not something which is suddenly going to manifest itself — and certainly will have no direct impact on the Ukraine war."

Hungarian opposition

Not all Europeans are on board with Brussels’ plans. Hungary has voiced opposition to continuing support for Ukraine. Hungarian Prime Minister Viktor Orban refused to sign the final leaders’ statement, so it was endorsed by only the remaining 26 member states.

In an interview on Hungarian television Friday, Orban warned Europe alone could not afford to support Kyiv.

“If you say that the war should go on then somebody must finance that. Now that the Americans quit, it will cost us a lot. If the Europeans want to carry on like this, then our last penny will be spent on this war,” Orban said.

European Union officials dismissed claims that Hungary’s opposition revealed a lack of unity.

“We all want peace. The difference is that 26 [member states] believe that the path to peace is by strengthening Ukraine's defense capacity. Hungary has isolated itself from this consensus; it stands alone. A country alone does not create division,” European Council President Antonio Costa said on Friday.

Outside the EU summit, demonstrators demanded that Europe seize the $200 billion in Russian assets currently frozen in European banks and use the money to defend Ukraine. While the idea is reportedly gaining support, several European governments fear such a move could impact global confidence in the euro as a reserve currency.