Canada’s F-35 Review, Portugal’s Exit, and the NATO Breakaway: European Jets Rise as U.S. Grip Weakens

Introduction: NATO’s Fighter Jet Crisis Just Got Real

For nearly two decades, the F-35 Lightning II was sold to NATO as more than just a fighter jet. It was a symbol of unity, interoperability, and American technological dominance—a warplane so advanced that to refuse it was to invite obsolescence.

But that illusion is cracking.

In March, Portugal became the first NATO country to cancel its F-35 order outright, citing instability in U.S. foreign policy and growing doubts about Washington’s long-term reliability. Within 24 hours, Canada followed suit—not with a cancellation, but with something more dangerous to Lockheed Martin: a full-spectrum contract review of its $19 billion commitment, publicly confirmed by Prime Minister Mark Carney on April 15.

That wasn’t a trial balloon. That was a declaration of strategic uncertainty.

The timing couldn’t be worse for the United States. President Donald Trump has escalated tariffs on Canada and the European Union, threatened to cripple NATO, and openly floated the idea of annexing Canada as a path to eliminate trade friction. European leaders, meanwhile, are accelerating their "Buy European" defense initiative, and pushing for a procurement realignment that could leave U.S. contractors—and influence—in the cold.

This isn’t a policy adjustment. This is the beginning of a continental shift.

• So now the questions get sharper:
  Will more NATO allies follow Portugal and Canada in challenging the F-35 program?
• Is Europe preparing to consolidate around Rafale, Gripen, and FCAS instead of Lockheed Martin’s stealth jet?
• And can the U.S. preserve its defense leverage when even its closest allies no longer trust the deal?

The age of guaranteed American dominance in NATO air power is over. The only question now is what replaces it—and how fast.

Let’s break it down.

1. Timeline of NATO’s F-35 Unraveling (March–April 2025)

Sometimes geopolitical ruptures don’t come with fanfare—they come with a press release, a shrug, and a phone call no one wants to answer. That’s what happened when Portugal backed out of the F-35 program.

The move was surgical, intentional, and grounded in the cold math of strategic self-preservation. On March 12, Lisbon quietly informed NATO partners that it was cancelling its planned F-35 acquisition, citing three clear reasons:

1. The unpredictability of U.S. foreign policy, particularly under Trump’s second presidency.
2. Growing discomfort with software dependence and remote disablement mechanisms reportedly embedded in the F-35.
3. A desire to align with European defense autonomy efforts—including possible adoption of the Rafale.

Hours later, the situation escalated.

On March 13, Canadian Defence Minister Bill Blair went public in an interview with CBC, confirming that Canada was “actively reassessing” its 88-jet commitment. He referenced the first 16 planes—already paid for and in production—but emphasized that the remainder of the order was “under full strategic review.” He cited value-for-money concerns, national sovereignty, and alternative European platforms as key variables.

Then things moved fast.

• March 17: Prime Minister Carney traveled to London and Paris, meeting with Keir Starmer and Emmanuel Macron. He publicly stated Canada was “exploring participation” in the new EU defense procurement pact—an unprecedented admission for a Five Eyes member.
• March 25: The European Commission advanced a $150B EU-wide military procurement plan, aimed at reducing dependence on U.S. suppliers. The plan explicitly encouraged member states to “prioritize interoperable European systems.”
• April 1 & April 10: Trump announced multiple new tariff layers targeting Canadian aerospace, steel, and agri-tech exports—effectively weaponizing trade to force political compliance.
• April 15: Carney confirmed the F-35 review had officially begun. The Department of National Defence admitted the scope was still being finalized, but that “alternatives” were on the table.

The message is clear: this is no longer hypothetical. The F-35’s dominance in NATO procurement is being challenged—methodically, publicly, and from both sides of the Atlantic.

And the pace is accelerating.

2. Canada’s F-35 Review: Strategic Pivot or Procurement Reset?

What began as a procurement contract has evolved into a geopolitical referendum.

When Prime Minister Mark Carney confirmed on April 15 that Canada’s Department of National Defence had formally launched a review of the F-35 program, it didn’t just shake up Lockheed Martin’s stock price—it signaled the most serious reconsideration of U.S. defense reliance in Canadian history.

Let’s be clear: Canada isn’t canceling the program (yet). The first 16 jets are still inbound. But the remaining 72—the lion’s share of the $19 billion deal—are up for negotiation, restructuring, or even redirection. And Ottawa is already talking to other suppliers.

A Political Mandate for Change

Carney, still in caretaker mode following his recent swearing-in, made one thing obvious: this review isn’t about “delays” or “technical tweaks.” It’s about national sovereignty and economic autonomy. Speaking from Dorval, Quebec, he declared that Canada was committed to “getting value for money” and maximizing domestic economic participation in any future defense deal.

That’s a direct rebuke of the F-35’s limitations: no local assembly, no tech transfer, and tightly controlled software access governed from the Pentagon.

Gripen Rising: A Viable European Alternative?

Enter Saab.

The Swedish defense giant lost the original bid in 2022 but left a compelling offer on the table: not only was the Gripen E-series tailored for arctic operations and austere basing conditions, it came with an offer Lockheed refused to match—domestic assembly and full technology transfer.

Now that matters.

Why? Because if Canada goes with Saab, it won’t just be buying jets—it will be rebuilding its own aerospace industrial base, which was gutted during decades of outsourcing to U.S. suppliers.

And Carney knows it. He’s already hinted that Canadian companies could become part of a new transatlantic supply chain through EU procurement pacts—something only possible if Canada pivots away from an all-F-35 fleet.

Rafale, Anyone?

France’s Dassault Rafale is also circling. Paris has already offered Rafales to Portugal as a post-F-35 alternative, and Macron has privately pitched the aircraft to Carney. While pricier than the Gripen, the Rafale offers nuclear capability, combat-proven versatility, and no software kill switches—a growing concern among NATO buyers.

Probability Assessment: What Will Canada Do?

• Canada completes the full 88-jet F-35 order: 30%
  → Carney’s review buys time but ends with status quo.
• Canada switches to a mixed fleet (F-35 + Gripen or Rafale): 50%
  → Ottawa keeps the initial 16 F-35s for NATO missions but adds European jets for sovereignty.
• Canada cancels the F-35 entirely post-2026: 20%
  → A full divorce. High-risk, but more feasible if U.S. pressure escalates.

This is no longer a question of procurement logistics. It’s a question of whether Canada defines itself as a sovereign actor in defense—or remains tethered to a fragile alliance led by a volatile United States.

And so far, the Carney government is acting like it wants options.

3. Europe’s Response: The Rise of ‘Buy European’ Defense Doctrine

If Canada is cautiously reconsidering its F-35 future, Europe is already halfway out the door.

Over the last six weeks, the European Union has accelerated what it long hinted at: a strategic divorce from U.S.-led defense procurement. The trigger wasn’t just Trump’s tariff salvos or his threats to pull funding from NATO. It was a deeper realization—one that Macron has articulated with increasing bluntness: the transatlantic defense relationship is no longer reliable.

Macron’s Mission: Defense Sovereignty, Not Dependency

French President Emmanuel Macron has championed the idea of a “European defense pillar” inside NATO for years. But now he’s going further, pitching a full-scale procurement realignment—one that would reduce dependency on U.S. systems like the F-35 and instead build up a European industrial base capable of standing alone.

And for once, he's not alone.

In a press conference with Carney on March 17, Macron argued that Europe must "control the tools of its own security." Days later, the European Commission unveiled a €150 billion defense procurement pact, encouraging member states to prioritize interoperable European platforms and consolidate manufacturing within EU borders.

This is the same policy playbook the U.S. has used for decades—but now, Brussels is running it in reverse.

Rafale Ascendant: France's Tactical Pitch

France’s Dassault Rafale is the tip of this spear. Combat-proven and NATO-compatible, the Rafale has already seen exports to India, Egypt, Greece, and Indonesia. But its biggest opportunity might be inside Europe itself—as the alternative to the F-35.

Portugal has reportedly entered informal talks with Dassault to fill the capability gap left by its F-35 cancellation. Spain and Belgium—both wrestling with political backlash over U.S. weapons dependency—are watching closely.

Macron’s pitch is straightforward:

• No software lockouts or remote override systems.
• Full national control over deployment, maintenance, and upgrades.
• Production contracts that benefit EU economies—not Texas.

And it’s landing.

Germany’s Calculus: Torn Between NATO and FCAS

Germany is in the most conflicted position of all.

• On one hand, it’s already committed to purchasing 35 F-35s to fulfill its nuclear-sharing duties under NATO.
• On the other, it’s a core partner in the Future Combat Air System (FCAS) project—Europe’s long-term sixth-gen fighter jet program, set to deploy by 2040.
• German defense experts are openly debating whether Berlin should pause further F-35 orders to avoid undermining FCAS before it’s airborne.

A procurement pivot from Berlin would carry more weight than Lisbon or Ottawa combined. And it’s not unthinkable.

Probability Forecast: Will Europe Fully Decouple from the F-35?

• France pushes Rafale across NATO: HIGH (80%)
  Macron is already acting as Europe’s arms dealer-in-chief.
• Germany delays additional F-35 orders by end of 2025: MODERATE-HIGH (60%)
  FCAS needs breathing room. The political appetite is there.
• Spain formally exits F-35 discussion within 12 months: MODERATE (40%)
  Domestic economic concerns + FCAS alignment = likely shift.
• EU codifies “Buy European” defense doctrine in law: MODERATE (50%)
  Already de facto. De jure status would send a message.

Europe’s not just shifting away from the F-35—it’s drawing a blueprint for a post-American defense architecture.

And with U.S. instability rising, more countries may decide it’s time to follow the plan.

4. The U.S. Response: Pressure, Penalties, and Narrative Warfare

For decades, the U.S. didn’t have to sell the F-35—it just had to offer it. The promise of stealth dominance, NATO interoperability, and exclusive access to next-gen tech made it irresistible.

But now, as allies back away, Washington is reaching for the only tools it has left: pressure, punishment, and narrative warfare.

Tariffs as a Blunt Instrument

Trump’s preferred weapon isn’t subtle—it’s economic. Since returning to office, he’s levied new tariffs on Canadian and European aerospace components, targeting sectors that coincidentally overlap with F-35 production and its rival platforms.

• Canadian aerospace? Tariffed.
• European avionics suppliers? Tariffed.
• Aluminum and titanium exports? Tariffed.

If Canada or any EU state fully exits the F-35 pipeline, expect this pressure to intensify. Washington won’t say it’s retaliation. But it won’t have to.

Software Lockdowns and Spare Part Squeezes

The more potent threat may not come from Trump—it may come from Lockheed Martin and the Pentagon.

The F-35 isn’t just a jet. It’s a software-defined platform controlled through encrypted systems that require U.S. approval for updates, diagnostics, and mission programming.

Allied nations don’t own the code. They rent access to it.

If a country starts scaling back or tries to pivot away from the F-35 mid-program, the U.S. has a range of options:

• Delay software patches under the guise of “testing”
• Restrict access to spares or maintenance tools
• Throttle performance features via remote deactivation (allegedly denied, but still feared)

In effect, Washington can make it painfully difficult for a halfway-out nation to continue operating the jets it already owns.

Narrative Warfare: Interoperability as Leverage

Expect the U.S. State Department and NATO command to lean hard on one central message: F-35 interoperability is non-negotiable.

The script will be familiar:

“If you’re not flying F-35s, you’re not truly integrated. You’re putting your pilots—and the alliance—at risk.”

It’s not just about jets. It’s about who gets a seat at the table during real-time mission planning. Countries operating outside the F-35 ecosystem may find themselves politically isolated within NATO command structures.

That’s the subtext: Buy American, or stay in the kiddie pool.

Probability Forecast: U.S. Reaction Scenarios

• Trump escalates trade penalties on defecting allies: HIGH (75%)
  Especially if Canada or Germany defects.
• Lockheed throttles support for partial dropouts: MODERATE-HIGH (60%)
  Quiet, deniable, but effective.
• NATO command pressures defectors on interoper5ability: CERTAIN (95%)
  It’s the alliance’s only real lever.

The message is clear: leaving the F-35 program comes at a cost. And Washington intends to make that cost unmistakably painful.

But for many allies, the question is no longer if there will be consequences—it’s whether they’re finally willing to pay them.

5. The Cost Spiral: Can Lockheed Martin Sustain the F-35 Program?

The F-35 program has always been a paradox: the most expensive weapons system in history, sold on the promise that the more countries bought in, the cheaper it would become.

That logic worked—until it didn’t.

Now, with Portugal gone, Canada reevaluating, and Germany hedging, the financial equation behind the F-35 is looking dangerously brittle. The entire program is built on economies of scale. If NATO partners start dropping out, that foundation cracks—and Lockheed Martin’s cost model begins to collapse under its own weight.

Every Exit Makes It More Expensive

At its core, the F-35 is a shared risk investment. Each NATO buyer helps spread the cost of:

• R&D amortization
• Software development and security testing
• Global sustainment infrastructure
• Spare part logistics and warehousing

If just one major buyer reduces its order—let alone cancels—it doesn’t just shrink Lockheed’s revenue; it raises the per-unit cost for every remaining country.

Portugal’s exit was small but symbolic. If Canada scales back, it’s financial. If Germany or Spain follows, it’s existential.

Rising Costs, Shrinking Value

Recent internal forecasts (unpublished but leaked via industry analysts) suggest:

• Each F-35A could rise $8–12 million per jet in cost if two NATO countries withdraw.
• Sustainment costs could rise 15–20% globally as fleet density shrinks.
• Smaller countries like Belgium, Norway, and the Netherlands may face contract renegotiations due to escalated costs—potentially prompting further exits.

This is the nightmare scenario: a cost death spiral where every buyer’s departure accelerates the collapse of the pricing model.

Lockheed’s Options Are Limited

Lockheed Martin can:

• Eat the costs (short term fix, long-term suicide)
• Pass the costs to the U.S. government (politically radioactive during a Trump administration)
• Cut corners or strip optional features (killing the jet’s appeal entirely)

None of these are sustainable.

Probability Forecast: The F-35’s Financial Fragility

• F-35 unit cost rises >10% by Q4 2025: HIGH (70%)
• Lockheed begins cutting back international deliveries by mid-2026: MODERATE (50%)
• Additional NATO members face cost-related pressure to scale back: HIGH (60%)

The F-35 program was built on mass adoption. Now, as nations exit or stall, that mass is evaporating—and with it, the jet’s economic viability.

In the arms race of 21st century geopolitics, the F-35’s greatest threat may not be Chinese stealth or European competition. It may be its own shrinking coalition of buyers.

6. Rafale and Gripen: The New NATO Fighter Jet Alternatives?

The F-35 isn’t just facing criticism—it’s facing competitors. Real ones.

As NATO’s faith in the American-built stealth fighter wanes, two European warplanes are stepping into the vacuum with increasing legitimacy: Sweden’s Saab Gripen E and France’s Dassault Rafale.

Neither has the stealth profile of the F-35. But both offer something the F-35 can’t: freedom. Freedom from U.S. software control. Freedom from remote diagnostics and hidden override code. Freedom from a defense ecosystem that punishes deviation with economic pain.

And that freedom is suddenly very attractive.

Rafale: France’s Geopolitical Flex

Dassault’s Rafale is the elder statesman of Europe’s air platforms—but it’s not aging out. It’s aging into a new geopolitical moment.

With nuclear-capable variants, multirole agility, and a combat-proven track record from Mali to Syria, the Rafale brings immediate credibility to any country looking to pivot away from U.S. control without sacrificing performance.

Macron is using it as a soft-power tool, personally pitching it to Portugal, Spain, and even Carney’s Canada. The message?

“Buy from Paris, not from a country that just threatened to annex you.”

In diplomatic terms, that’s a hell of a sales pitch.

Gripen: The Pragmatist’s Choice

Saab’s Gripen E is leaner, cheaper, and arguably more relevant for mid-tier NATO allies. Designed for rugged environments, short runways, and modular upgrades, it’s tailor-made for Arctic powers like Canada or nations with limited infrastructure.

But the real killer app? Technology transfer and local assembly.

Sweden’s deal with Canada included:

• Domestic production lines
• Full sovereignty over software and mission data
• Cost-per-hour flight ops at nearly half the F-35’s

For countries like Canada or Portugal, that’s not just appealing—it’s strategic. It means rebuilding domestic aerospace capacity while breaking Lockheed’s monopoly.

Probability Forecast: Can Rafale and Gripen Fill the Vacuum?

• Rafale picked up by another NATO ally (post-Portugal): HIGH (70%)
• Gripen added to Canada’s mixed fleet or replaces F-35 entirely: MODERATE-HIGH (60%)
• Both jets form basis of an informal non-F-35 procurement bloc: MODERATE (45%)

The F-35 may still be the stealthiest jet on the planet, but right now? Gripen and Rafale are the fastest-moving.

And in the geopolitical race to escape U.S. defense control, speed might matter more than stealth.

7. Strategic Forecast: NATO Procurement Over the Next 6–12 Months

The F-35’s moment of reckoning isn’t a distant theoretical—it’s unfolding in real time. Allies are moving. Markets are reacting. Washington is posturing. Europe is organizing.

Now the question becomes: what happens next?

At Prime Rogue Inc., we assess geopolitical defense transitions not just by sentiment, but by scenario mapping. Based on current declarations, procurement data, and alliance dynamics, here’s what the next 6–12 months are likely to look like across NATO:

Scenario 1: NATO Procurement Fragmentation

Probability: 50%

Canada adopts a mixed fleet. Germany delays future F-35 commitments. Spain exits the discussion entirely. The result is a fragmented NATO air posture—with some flying U.S. stealth, others flying French or Swedish jets, and command interoperability suffering as a result.

Interoperability breaks down. F-35 loses its monopoly. NATO cohesion weakens.

Scenario 2: Status Quo With Concessions

Probability: 30%

The U.S. applies enough pressure to keep allies in line, offering limited concessions like spare part guarantees or training offsets. Canada keeps all 88 jets, but at the cost of domestic political backlash. EU allies stall but don’t defect.

F-35 survives intact—but resentment simmers under the surface.

Scenario 3: Hard U.S. Retaliation, Total Decoupling Begins

Probability: 20%

Trump escalates dramatically: harsher tariffs, threats to exit NATO, tech blackmail. In response, key allies accelerate European alignment. Canada cancels remaining F-35 orders. EU launches legal framework for a Buy European Pact. Lockheed begins to scale back production forecasts.

A new European defense bloc forms in open defiance of U.S. arms control.

Key Inflection Points to Watch (Q2–Q4 2025)

• Canada’s F-35 decision (projected: June–August)
• German Bundestag procurement review (projected: Q3)
• EU defense summit on procurement harmonization (tentative: Fall 2025)
• Lockheed Martin earnings call and delivery projections (Q3 financials)

One defection can be explained. Two raise eyebrows. But three or more within 12 months? That’s not drift.

That’s a breakaway.

8. Conclusion: NATO’s F-35 Era Is No Longer Inevitable

The F-35 was supposed to be the unifying symbol of NATO’s next-generation air power—a marvel of stealth and software binding U.S. allies into one interoperable network. For a time, it was.

But in 2025, that consensus is gone.

Portugal has already walked. Canada is halfway out the door. Germany and Spain are looking for exits. The European Union is crafting new procurement doctrine. And Washington, instead of recalibrating, is doubling down on pressure, punishment, and loyalty tests.

This isn’t a story about fighter jets. It’s a story about who controls the future of Western defense.

And increasingly, it looks like NATO will fracture into two camps:

• One still tied to the F-35, and by extension, the U.S.
• The other seeking sovereignty, flexibility, and European-made independence.

For Canada, the F-35 review isn’t just a procurement audit—it’s a geopolitical litmus test. Does Ottawa continue outsourcing defense to an increasingly erratic ally? Or does it hedge, diversify, and rebuild capacity at home?

The decision will echo across Europe, the Arctic, and NATO itself.

Final Takeaways:

• The F-35 is no longer inevitable—it’s optional.
• European alternatives (Gripen, Rafale, FCAS) are now credible NATO options.
• U.S. dominance over allied air power is weakening—and Washington knows it.
• Canada’s upcoming decision will either reinforce the old order—or light the fuse on a new one.

The skies are still filled with F-35s—for now.

But in the silence behind the afterburners, you can hear the machinery of realignment starting to hum.