
The United States continues to sell record breaking amounts of arms on the global market, with $318.7 billion in total sales in Fiscal Year 2024, per US State Department figures released last Friday. This is the third consecutive year that has seen the total increase, driven in large part by Russia’s ongoing aggression against Ukraine, but also a worsening security environment globally, with war having broken out in the Middle East at the start of FY 2024 in October 2023 following Hamas’ attack on Israel and escalating tensions in the Indo-Pacific. The $318.7 billion in sales is a 33.7% increase over FY 2023’s $238.4 billion, driven by robust growth from both the Direct Commercial Sale (DCS) and Foreign Military Sales (FMS) programs.
Direct Commercial Sales are contracts between foreign entities and American companies which have been licensed to export defense articles and/or services. The Foreign Military Sales program allows for foreign governments and international organizations to enter a government-to-government agreement with the United States for defense articles and/or services, in which the Department of Defense (DoD) is responsible for fulfilling the terms of the contract. FMS allows for international customers to procure from the DoD’s own stocks or take advantage of their buying power by contracting for articles and/or services that the DoD is already procuring from industry for themselves and/or other customers. Both DCS and FMS are subject to US arms export control laws & regulations, and “Major Arms Sales” above certain monetary values are also subject to Congressional review.

DCS has historically dwarfed FMS, with FY 2021 & FY 2022 seeing approximately three times as much being sold through commercial contracts than government-to-government sales, by dollar value. The last two Fiscal Years has seen that gap narrow considerably though, with DCS approximately doubling FMS in total sales in FY 2023, and only 70% more in FY 2024, with each closing out the year at $200.8 billion and $117.9 billion, respectively. FY 2024 also saw a new record set for the number of new, unclassified Major Arms Sales approved in a single month, with 22 in August 2024, blowing past the previous high of 17 in December 2023. Both that month and the entire year have been dominated by high dollar value “FMS cases” for aircraft and missiles. The F-35 Joint Strike Fighter program continues to add orders from both existing and new customers; Türkiye received approval for F-16 acquisition, modernization and weapons in an eye-popping approved sale for an estimated $23 billion; PATRIOT air defense systems and missiles are in high demand; and stand-off & anti-radiation missiles have become hot commodities.
Of FMS’ $117.9 billion total, $96.9 billion was purchased by US allies and partners, $11.8 billion was funded by the State Department’s Foreign Military Financing (FMF) program, and $9.2 billion was funded through DoD Building Partner Capacity programs, such as the Ukraine Security Assistance Initiative and certain other State Department programs. The Foreign Military Financing program was thrust into the spotlight last Friday as well, due to Secretary of State Rubio issuing a 90-day pause on all State Department funded foreign assistance, including both humanitarian and security assistance. FMF is a US funded grant/loan program that helps allies and partners finance the procurement of defense articles & services from the FMS and DCS programs. Rubio’s directive includes exceptions for FMF funds for both Israel and Egypt, who are the biggest beneficiaries of the program, receiving $3.3 billion and $1.3 billion annually, respectively. It also provides for other exceptions, as approved by the Director of Foreign Assistance.
While the pause does not impact the FMS or DCS programs overall, any freeze in FMF and other State Department security assistance funding, such as International Narcotics and Law Enforcement grants, even on a temporary basis, could having a chilling effect on the growth of sales. The lack of explicit exceptions for other major recipients of FMF, like Jordan, Ukraine, Taiwan and the Philippines may cause these countries to reconsider planned arms acquisitions from the United States. Despite this, the FY 2025 outlook for US arms sales should remain rather healthy. With President Trump pushing hard for the NATO alliance to set a new 5% floor for GDP spent on defense, Europe and Canada alone will add considerably to this year’s figures. Saudi Arabia will also likely return as a top customer this year. In August 2024 the Biden Administration lifted a moratorium on the sale of offensive weapons to the Kingdom, which had been in place since 2021. They subsequently approved $1.5 billion in Major Arms Sales at the start of FY 2025 in October 2024. Increasing arms sales to Saudi Arabia was a priority for the first Trump Administration, and that is unlikely to change.