Shares in European defense and aerospace companies plunged on new U.S. tariffs, raising concerns about disruptions to international supply chains. Investors also began to book profits after the stocks had seen significant gains since the start of 2025.

German defense group Rheinmetall suffered its worst single-day drop in history, with its shares plunging 27%, before recovering partially after the company’s CEO bought back shares at a discount, according to Bloomberg.

Other major companies, such as Airbus SE and Rolls-Royce Holdings Plc, also fell by up to 14%, but managed to pare their losses over time. The market decline was triggered by the announcement of the US company Howmet Aerospace, a supplier of parts for giants such as Airbus and Boeing, about the introduction of force majeure due to a sharp increase in import duties. The move was a consequence of new customs tariffs imposed by the administration of President Donald Trump.

Analysts at Jefferies noted that even one missing part, such as a nut or bolt, can stop the entire supply process in the aerospace and defense industry. This situation has serious consequences for companies that depend on continuous supply of components.

In addition to the mentioned giants, the decline in shares was also recorded in the French company Thales SA, Germany's Hensoldt AG and Italy's Leonardo SpA. This was due to the general weakening of the market, as the defense sector became an attractive target for selling after the rapid growth of stocks in previous years.

Since the outbreak of the war in Ukraine, the defense sector has experienced significant growth, and the basket of relevant stocks from Goldman Sachs has increased by 50% in the year. However, investors are now increasingly questioning whether the prices of these stocks adequately reflect the real state of affairs in the industry.