The November 2025 Memorandum on Arms Transfer and Security Cooperation Reform marks one of the most consequential reorganizations of the U.S. defense export system in a generation. By realigning the Defense Security Cooperation Agency (DSCA) and Defense Technology Security Administration (DTSA) under the Under Secretary of War for Acquisition and Sustainment (USW A&S), the Department of War (DoW) has effectively fused acquisition, export control, and industrial-base management into a single, integrated enterprise.
Anchored in Executive Order 14268 and the reinstated 2018 Conventional Arms Transfer Policy, this reform signals a decisive transformation in the American strategic mindset: arms transfers are no longer viewed merely as instruments of diplomacy, but as engines of industrial revitalization, deterrence, and allied burden-sharing.
For decades, Washington’s Foreign Military Sales (FMS) process has been mired in bureaucracy—defined by regulation, delay, and risk aversion. This sluggish machinery has steadily eroded U.S. competitiveness against more agile exporters like France, Israel, and increasingly China.
The Trump Administration’s answer is not incremental reform but structural redefinition. It views arms sales as an extension of industrial strategy—a fusion of deterrence and economic policy that positions defense production as the backbone of American power.
The memorandum’s figures reveal both scale and strain:
These numbers underscore a truth: America’s defense export system has outgrown its Cold War design. The new policy aims to make the United States the “partner of choice” by cutting lead times, integrating exportability at the design stage, and harnessing private-sector efficiency to expand global reach.
This is the rebirth of the Arsenal of Democracy—but with a distinctly modern twist: industrial deterrence.
Perhaps the most transformative change is institutional, not rhetorical. By moving DSCA and DTSA from Policy (USW P) to Acquisition & Sustainment (USW A&S), the Administration has redefined who “owns” the defense-sales mission.
Before: Arms transfers were overseen through a policy lens—tethered to diplomacy, coordination, and restraint.
After: They are managed through an industrial lens—driven by throughput, performance, and global demand management.
This realignment creates a “single line of authority” that connects system design, exportability, and production under one command structure. It reflects a doctrine increasingly visible among America’s allies—particularly the United Kingdom and Japan—where acquisition and foreign sales are fused into a unified industrial policy.
In practical terms, this shift transforms the defense-industrial base into an engine for rapid allied rearmament, not just domestic readiness. The DoW’s new enterprise model brings technology security forward in the life cycle, ensuring export compliance and competitiveness are engineered together from the start.
The memo’s directive to “arm our allies and partners to accelerate greater burden-sharing” reframes NATO’s 2 percent benchmark not as an accounting goal but as an industrial partnership. Allies are expected to co-produce, co-finance, and co-sustain—linking their national defense programs to U.S. supply chains.
By elevating Direct Commercial Sales, Washington is inviting private capital into what was once a purely governmental process. This effectively creates a dual-track production system that serves both U.S. and foreign markets, keeping American assembly lines active while enhancing allied deterrence.
With DTSA under A&S, technology security becomes a design imperative rather than a regulatory checkpoint. Building exportability into systems from inception means U.S. firms can innovate for both domestic and international demand—without the friction of late-stage approvals.
1. Europe: A Competitive Ally
Europe’s defense primes—particularly in France, Germany, and the Nordics—now face a recalibrated competitor. As the U.S. accelerates delivery timelines and lowers transactional friction, Washington is setting the tempo for NATO’s industrial integration. Yet the memo’s language on “leveraging allied investments across the global defense industrial base” hints at opportunity as well as challenge: European firms may find new joint-production pathways—if they are willing to operate under U.S. standards and export regimes.
2. The Indo-Pacific: Strategic Acceleration
For Japan, Taiwan, and the Philippines, the reforms mean more than procurement efficiency—they signal strategic coherence between U.S. deterrence policy and industrial execution. Expect to see an uptick in co-manufacturing agreements, exportable system variants, and cross-border sustainment networks tied to America’s Indo-Pacific posture.
3. Canada and the North American Base
Canada, already embedded in U.S. industrial frameworks via ITAR and NORAD, may be among the quiet beneficiaries. As the U.S. modernizes its FMS/DCS digital systems and begins forecasting global demand, Canadian suppliers could emerge as second-tier integrators in U.S. export programs—particularly in aerospace and advanced materials.
Bold structural change brings inevitable tension.
Still, the Administration’s underlying conviction is unmistakable: economic strength is strategic strength.
For U.S. and allied defense firms, the implications are immediate and material:
Secretary Hegseth’s memorandum is more than an internal reform—it is a strategic reorientation of America’s defense-industrial identity. By uniting acquisition, export control, and industrial policy under one command, Washington is remilitarizing its economic logic—not for conquest, but to secure global primacy through production and partnership.
For defense-industry leaders, the message is clear: future access to markets will hinge on alignment with the U.S. acquisition-export nexus, where efficiency, interoperability, and political loyalty intersect.
As the memorandum concludes:
“The readiness and security of our Warfighters, allies, and partners depend on it.”
Read the full memorandum at https://media.defense.gov/2025/Nov/10/2003819440/-1/-1/1/UNIFYING-THE-DEPARTMENTS-ARMS-TRANSFER-AND-SECURITY-COOPERATION-ENTERPRISE-TO-IMPROVE-EFFICIENCY-AND-ENABLE-BURDEN-SHARING.PDF
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