While European defense stocks soar, their American counterparts are stuck in the trenches.

As reported by the Financial Times, President Donald Trump's renewed calls for Europe to shoulder its own security burden paired with plans to trim Pentagon spending have clipped the wings of U.S. defense giants.

Europe's Defense Boom, America's Bust

Shares of Germany's Rheinmetall have skyrocketed nearly 40% since Trump's return to the White House, while South Korea's Hanwha Aerospace has surged more than 70%, fueled by NATO rearmament deals.

Meanwhile, American stalwarts like Lockheed Martin Corp (LMT  ) and Northrop Grumman Corp (NOC  ) are down 13% and 10.8%, respectively, as fears of shrinking Pentagon contracts weigh on investor sentiment.

Winners & Losers Stateside

Among the top U.S. players, Lockheed Martin (-13%) and Northrop Grumman (-10.8%) have taken the biggest hits, while Boeing Co stands out as the lone gainer, up 2.5% since Trump took office.

RTX Corp (RTX  ) (-0.25%) has held relatively steady, but General Dynamics Corp (GD  ) (-9.3%) and L3Harris Technologies Inc (LHX  ) (-10.3%) have also faced notable declines.

Investor Implications: Pivot Or Persevere?

For investors, the message is clear: follow the money and it's heading across the Atlantic.

With European defense budgets ballooning and the US tightening its belt, ETFs like iShares MSCI Europe ETF (IEUR  ) and SPDR S&P Aerospace & Defense ETF (XAR  ) might offer better short-term returns than their U.S.-heavy counterparts.

Unless U.S. defense contractors can secure new international contracts or navigate domestic budget cuts, their stocks may remain stuck in neutral while European rivals continue their ascent.