U.S. friction with Ukraine has NATO leaders raising military spending, fueling shares of weapons makers and helping power European stocks to their strongest start to any year since 1998.

Summary

Trump’s economic policies, including tariffs and NATO spending demands, have rattled U.S. markets but fueled a surge in European defense stocks.

As countries boost military budgets, firms like Rheinmetall and BAE Systems have seen sharp gains. The STOXX Europe 600 is up 7.7%, while U.S. markets have declined.

European leaders are also loosening regulations to stay competitive. Meanwhile, Chinese stocks are rising due to domestic stimulus.

Analysts warn that U.S. tariffs could still disrupt global growth, but for now, international markets are benefiting from Trump’s policies.