Trump halts military aid to Ukraine - what does that mean?

By Mike Stone and Erin Banco

WASHINGTON (Reuters) - U.S. President Donald Trump has frozen military aid to Ukraine, just days after publicly confronting Ukrainian President Volodymyr Zelenskiy at the White House and accusing him of being insufficiently grateful for Washington’s backing.

The halt to U.S. military aid does not only have significant implications for the three-year-old war between Ukraine and Russian invasion forces. It will also impact the U.S. defense industry. Here’s how: 

HOW MUCH HAS THE U.S. SPENT ON MILITARY AID FOR UKRAINE?

The United States has pledged and spent at least $65 billion on military aid for Ukraine since Russia’s full-blown February 2022 invasion. Primarily, that assistance has been allocated through two tools: the Presidential Drawdown Authority (PDA) and the Ukraine Security Assistance Initiative (USAI). 

WHAT IS THE PRESIDENTIAL DRAWDOWN AUTHORITY? 

More than $31 billion worth of weapons and equipment has been pledged to Ukraine under the Presidential Drawdown Authority (PDA), which allows the president to approve rapid transfers to foreign countries from U.S. military stockpiles, without having to seek congressional approval. 

More than $20 billion worth of weapons and equipment has already been shipped this way, according to a Reuters analysis.

Ukraine is still awaiting a large shipment of armored vehicles that are not set to be delivered until mid-2025, said a Ukrainian official, speaking on condition of anonymity. They are currently being refurbished at depots in Europe.

WHAT IS THE UKRAINE SECURITY ASSISTANCE INITIATIVE? 

The U.S. has bought nearly $33.2 billion worth of new arms and military equipment for Kyiv directly from U.S. and allied defense contractors. That money was allocated by Congress. 

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

The USAI is a longer-term approach to arming Ukraine. It will take years for all these weapons to be manufactured and shipped to the battlefield. This category of weapon provides Ukraine a sustained pipeline of modern weaponry and simultaneously sustained revenue for manufacturers.

The amount of aid that still needs to be delivered from the American contracts is "significantly less than 15 percent", a Ukrainian official said. Some of the weapons still to be delivered include advanced rocket launchers and missiles.

HOW DOES THIS AFFECT U.S. COMPANIES? 

The halt to USAI not only impacts current orders, but also future production plans and investment decisions for U.S. companies such as L3Harris Technologies (NYSE:LHX), Lockheed Martin Corp (NYSE:LMT), RTX Corp and General Dynamics (NYSE:GD). 

It’s unlikely that the U.S. government would cancel the orders for Ukraine that have not yet been delivered. It could decide to keep those weapons for itself.  

Washington needs to replenish its own stocks and - instead of placing new orders - could instead keep the weapons that were bound for Ukraine, essentially reducing the future amount of new contracts on offer to U.S. companies.

WHAT WEAPONS HAVE BEEN DELIVERED TO UKRAINE? 

Among the weapons and equipment provided during the war are U.S.-made F-16 fighter jets, long-range ATACM missiles, High Mobility Artillery Rocket Systems (HIMARS), the Guided Multiple Launch Rocket System (GMLRS), short-range air defense interceptors, replacement vehicles, air-to-ground munitions, and artillery.

GD: is this perennial leader facing new challenges?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Sure, there are always opportunities in the stock market – but finding them feels more difficult now than a year ago. Unsure where to invest next? One of the best ways to discover new high-potential opportunities is to look at the top performing portfolios this year. ProPicks AI offers 6 model portfolios from Investing.com which identify the best stocks for investors to buy right now. For example, ProPicks AI found 9 overlooked stocks that jumped over 25% this year alone. The new stocks that made the monthly cut could yield enormous returns in the coming years. Is GD one of them?

Unlock ProPicks AI to find out