President Donald Trump is expected to inform Turkey that he is ready to restore the country's participation in the F-35 Joint Strike Fighter program, according to a New York Times report citing sources from July 7, 2026. The White House expelled Turkey from the program in 2019 over its purchase of the Russian S-400 missile system. Reinstating Turkey would allow Ankara to receive the 100 F-35 jets it initially ordered, a procurement valued at approximately $11 billion. The decision would materially alter defense contractor order books and strategic alignments in the Black Sea region.
Context — [why this matters now]
Turkey was officially removed from the F-35 program on July 17, 2019, following its acceptance of the first S-400 battery from Russia. The U.S. sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA) cost Turkish firms an estimated $9 billion in lost revenue from manufacturing parts for the jet. The current geopolitical backdrop features heightened tensions with Russia in the Black Sea and a renewed U.S. focus on great power competition. The catalyst for this policy review appears to be a combination of Turkey's recent diplomatic overtures, including blocking Russian naval movements into the Black Sea, and a strategic calculus that a strengthened Turkey enhances NATO's eastern flank. The timing precedes the next major NATO summit scheduled for late 2026.
Data — [what the numbers show]
Lockheed Martin's F-35 program represents over 26% of the company's total annual revenue, which was $67.6 billion in 2025. Turkey's initial order comprised 100 F-35A conventional takeoff and landing variants. The unit cost for an F-35A in 2026 is approximately $78 million, down from $89 million in 2020. The table below shows the projected impact on a key Turkish defense firm.
| Metric | Before Expulsion (2018) | Current Status (2026) | Projected with Reinstatement |
|---|
| Turkish Aerospace Industries Revenue from F-35 | $1.2 billion annually | $0 | Potentially $800 million+/year |
Turkish defense spending as a percentage of GDP stands at 2.1% in 2026, compared to the NATO target of 2.0%. The iShares U.S. Aerospace & Defense ETF (ITA) has gained 4.3% year-to-date, underperforming the S&P 500's 8.1% gain over the same period.
Analysis — [what it means for markets / sectors / tickers]
The primary beneficiary would be Lockheed Martin (LMT), which could see its order backlog increase by over $7.8 billion. Turkish Aerospace Industries, a privately held entity, would regain its role as a manufacturer of central fuselages and composite skins. Secondary beneficiaries include engine-maker Pratt & Whitney, a unit of Raytheon Technologies (RTX), and Northrop Grumman (NOC), which supplies components. European defense contractors like BAE Systems (BAESY) and Airbus (EADSY) could face increased competition in Turkey's future procurement plans. A key risk is congressional opposition; the Senate Foreign Relations Committee could block the move, arguing it undermines CAATSA sanctions and rewards Ankara's prior strategic drift. Positioning data from recent CFTC reports shows increased speculative long interest in the Turkish lira (TRY), anticipating a diplomatic thaw. Hedge fund flows into the iShares U.S. Aerospace & Defense ETF (ITA) have increased by 15% over the past month.
Outlook — [what to watch next]
The immediate catalyst is an official announcement from the White House, expected before the NATO summit in November 2026. Key levels to watch include the USD/TRY currency pair holding below 35.00, which would signal market confidence in the normalization path. A formal notification to Congress is required for major arms sales; any delay or rejection by key committees like Senate Foreign Relations would be a negative signal. The next F-35 Joint Program Office quarterly report will detail any changes to production schedules and cost projections. Lockheed Martin's next earnings call on October 20, 2026, will provide management commentary on the potential order boost.
Frequently Asked Questions
How will Turkey paying for the F-35s affect its economy?
Turkey's central bank reserves stand at $98 billion as of June 2026. Financing a multi-billion dollar procurement would likely involve a combination of direct budget allocation, offset agreements where Turkish firms supply parts, and potentially external financing. The strain could be managed if the purchase is spread over a decade, with annual payments of roughly $1.1 billion representing about 4% of the current annual defense budget.
What happens to Turkey's existing Russian S-400 systems?
The S-400 systems remain a major point of contention. A likely condition for F-35 restoration, though not publicly confirmed, would be Turkey placing the S-400s in a storage or non-operational status under U.S. observation. An outright decommissioning and return to Russia is less probable but would be the strongest signal of a full strategic realignment. Turkey has previously proposed a technical committee to study interoperability concerns.
Which other U.S. defense exports to Turkey could be unblocked?
Following a potential F-35 deal, the U.S. State Department could approve the long-pending sale of 40 new F-16V Block 70 fighter jets and 80 modernization kits for Turkey's existing fleet, a package valued at $20 billion. Approval for Patriot air defense system sales, which Ankara sought as an alternative to the S-400, would also become more likely, directly benefiting Raytheon (RTX).
Bottom Line
Reinstating Turkey into the F-35 program would represent a major geopolitical reset with direct, multi-billion dollar implications for U.S. defense primes.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
