The Pentagon Just Outsourced Its Missile Shortage to Germany
A new US-Germany pact turns Bavaria into an overflow factory for America's scarcest munitions — Patriot interceptors now, Tomahawk components next. The deal says more about empty American magazines than alliance politics, and it redraws who profits from European rearmament.
On Tuesday afternoon at the Pentagon, US Defense Secretary Pete Hegseth and German Defense Minister Boris Pistorius signed an agreement that received polite, procedural coverage: a pact to "advance defense industrial cooperation" between the two countries. Strip away the communique language and the substance is more striking. The United States just formalized an arrangement under which Germany becomes an overflow factory for America's scarcest munitions — starting with Patriot interceptors, and potentially extending to components of the Tomahawk cruise missile.
That is not a routine alliance deliverable. It is an admission, in writing, that the American defense industrial base cannot produce its two most-demanded weapons fast enough — and a decision about who profits from fixing that.
The Two Most Rationed Weapons in the West
Patriot interceptors and Tomahawks have become the prime examples of Western munitions scarcity, for different reasons.
The Patriot problem is Ukraine. European operators have funneled large parts of their interceptor inventories to Kyiv to blunt Russian missile and drone barrages, and are now scrambling to rebuild their own stocks while Ukraine keeps firing. Lockheed Martin built roughly 500 of the latest PAC-3 MSE interceptors in 2024 and has been pushing output toward 650 a year — against a queue of more than a dozen Patriot-operating nations plus a war that consumes interceptors monthly. On the older PAC-2 side, NATO's procurement agency placed an order in 2024 for up to 1,000 GEM-T interceptors, worth around $5.5 billion, precisely because national stockpiles had been drawn down to uncomfortable levels.
The Tomahawk problem is Iran. US forces reportedly expended a significant share of the Pentagon's Tomahawk inventory during the war against Iran — a campaign that, per Defense News, also left hundreds of US military buildings and dozens of aircraft damaged by Iranian strikes. The missile's 1,000-mile precision reach makes it the backbone of American conventional strike planning, which is exactly why Washington has been reluctant to export it while its own magazines are thin. For European countries like Germany trying to build a long-range strike capability from scratch, Tomahawks have been nearly impossible to obtain on any useful timeline.
Scarcity on both lines is the context for everything signed on Tuesday.
What Was Actually Agreed
The pact aligns the Pentagon's acquisition-reform push with Germany's own Procurement Acceleration Act, creating a framework for joint development, licensed manufacturing, and expanded maintenance capacity. Hegseth framed it as allied burden-sharing under his "NATO 3.0" banner. The concrete elements matter more than the framing:
- Patriot production in Bavaria expands. MBDA Deutschland's plant in Schrobenhausen already builds PAC-2 GEM-T interceptors through COMLOG, its joint venture with RTX's Raytheon. Pistorius confirmed that production of the newest PAC-3 MSE interceptor — the one every Patriot operator actually wants — begins at Schrobenhausen later this year.
- Tomahawk enters the conversation. Both governments will now assess which components of the cruise missile German industry could supply. Berlin wants to buy roughly 400 Tomahawks along with Typhon launchers — a package reported at €3.4 billion — as the core of its new "deep precision strike" complex.
- Germany keeps buying American at scale. Defense spending is up 25% year over year to roughly $147 billion, on a path toward NATO's new 5%-of-GDP benchmark. On Friday, Pistorius caps his US trip in Fort Worth, taking delivery of Germany's first F-35 off Lockheed's production line, with 35 ordered and more under discussion.
The direction of travel is unmistakable: the world's third-largest defense budget is being wired directly into the American defense industrial base — and in exchange, Germany gets the licenses to build what America cannot build fast enough.
The obvious question for investors: when an arsenal constraint, not demand, is the binding variable on the world's largest weapons programs, who captures the money as that constraint lifts — and who is quietly threatened by it?
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