Trump’s Pro-Military Rhetoric Signals Potential Tailwinds for U.S. Defense Stocks and Headwinds for China ETF

President Trump has posted a new announcement on Truth Social, the social media platform. He wrote:

“Remember, for all of those big NATO fans, they were at 2% GDP, and most weren’t paying their bills, UNTIL I CAME ALONG. The USA was, foolishly, paying for them! I, respectfully, got them to 5% GDP, AND THEY PAY, immediately. Everyone said that couldn’t be done, but it could, because, beyond all else, they are all my friends. Without my involvement, Russia would have ALL OF UKRAINE right now. Remember, also, I single-handedly ENDED 8 WARS, and Norway, a NATO Member, foolishly chose not to give me the Noble Peace Prize. But that doesn’t matter! What does matter is that I saved Millions of Lives. RUSSIA AND CHINA HAVE ZERO FEAR OF NATO WITHOUT THE UNITED STATES, AND I DOUBT NATO WOULD BE THERE FOR US IF WE REALLY NEEDED THEM. EVERYONE IS LUCKY THAT I REBUILT OUR MILITARY IN MY FIRST TERM, AND CONTINUE TO DO SO. We will always be there for NATO, even if they won’t be there for us. The only Nation that China and Russia fear and respect is the DJT REBUILT U.S.A. MAKE AMERICA GREAT AGAIN!!! President DJT”

How Will Trump’s Statement Affect the Stock Market?

This latest post has the potential to affect the stock market. That’s because Trump’s emphasis on rebuilding the U.S. military and portraying NATO as dependent on U.S. strength could boost sentiment toward U.S. defense contractors like Lockheed Martin, Northrop Grumman, RTX, and aerospace & defense ETFs (ITA, PPA, XAR) on expectations of higher defense spending and sustained geopolitical tensions. His framing of China and Russia as primary adversaries may also support U.S. defense names while adding perceived geopolitical risk for China-linked assets, potentially weighing on sentiment toward the iShares MSCI China ETF (MCHI) if investors price in more strategic confrontation or sanctions risk. However, markets may discount the more extreme claims as political rhetoric, so any stock moves would likely hinge on how seriously investors believe this stance will translate into concrete policy or spending changes in a future administration.

Here are some of the stocks that might be affected:
Lockheed Martin ((LMT)),
Northrop Grumman Corp. ((NOC)),
Rtx Corporation ((RTX)),
iShares MSCI China ETF ((MCHI)),
Invesco Aerospace & Defense ETF ((PPA)),
SPDR S&P Aerospace & Defense ETF ((XAR)),
iShares U.S. Aerospace & Defense ETF ((ITA)).