Samer Choucair: Ally Reliability Now Carries a Risk Premium in Defence Contracts
Investment leader Samer Choucair said Canada’s review of its planned purchase of U.S.-made F-35 fighter jets has evolved from a technical defence decision into a broader test of the cost of relying on a single strategic ally.
Choucair said the breakdown in trade negotiations between Washington and Ottawa, followed by new U.S. tariffs of as much as 50% on portions of Canadian exports, has changed the way the procurement should be viewed. What was once primarily a military-capability decision is increasingly becoming a question of capital allocation, supply-chain resilience, and industrial sovereignty. Recent trade tensions have indeed intensified sharply, with Washington imposing 50% tariffs on roughly $20 billion of Canadian goods and Canada announcing retaliatory measures.
Canada’s fighter-replacement program is designed around the acquisition of as many as 88 F-35As. The government has already committed to an initial tranche of 16 aircraft, while the broader procurement remains under review. Canada currently values the core project at approximately C$27.7 billion, while the Auditor General has estimated that additional infrastructure upgrades and advanced weapons required for full operational capability could add at least another C$5.5 billion.
Samer Choucair said any reduction in the remaining order would have significance well beyond Canadian defence policy.
“A reduction in the outstanding order would not simply be a domestic defence story,” Choucair said. “It would signal that long-duration government contracts are increasingly vulnerable to trade-policy shocks.”
The issue is particularly important because of Canada’s deep economic integration with the United States. The bilateral trade dispute has increasingly exposed the risks embedded in that dependence, even as Ottawa is simultaneously increasing defence expenditure and reassessing how much strategic capacity should remain under domestic control.
Choucair said institutional investors can no longer evaluate tariff policy and government procurement as separate categories.
“When a defence contract becomes part of the leverage in a trade confrontation, the cash-flow horizon of a multi-year contract changes,” Samer Choucair said. “Capital does not punish the need for the aircraft. It punishes the supplier’s exposure to a sudden political decision in the buyer’s jurisdiction.”
The F-35 Supply Chain Makes Diversification More Complicated
The Canadian dilemma is complicated by the country’s long-standing participation in the F-35 industrial ecosystem itself.
More than 110 Canadian companies have historically contributed to the development and production of the F-35. As of 2026, 37 Canadian companies held active contracts within the program, while each aircraft produced globally contained roughly C$3.2 million to C$3.3 million in Canadian-made components, according to Canadian government figures.
That means reducing Canada’s F-35 purchases would not simply shift defence spending away from an American platform. It could also affect Canadian aerospace companies whose revenues depend on continued participation in the global F-35 production and sustainment network.
For Choucair, that interdependence illustrates why modern defence procurement increasingly resembles industrial policy.
A government is not only purchasing aircraft. It is also choosing which maintenance networks, software ecosystems, component suppliers, training systems, and upgrade cycles its military will depend on for decades.
Potential alternatives have therefore increasingly been assessed not simply in terms of aircraft performance, but also through the lens of domestic assembly, technology transfer, maintenance capability, and long-term sovereign control.
Choucair said the investment implications of that shift are significant.
“Investors became accustomed to pricing NATO operational interoperability almost as though it were a free option,” Choucair said. “Today, we are discovering that the reliability of an ally’s industrial base carries its own risk premium.”
In that environment, diversification should no longer automatically be viewed as a sacrifice of efficiency. It can increasingly function as a hedge against sovereign counterparty risk.
Defence Procurement Is Becoming Industrial Policy
Samer Choucair said the Canadian debate matters well beyond North America because governments globally are reconsidering how much of their defence supply chains should remain dependent on external partners.
The traditional procurement model prioritized performance, interoperability, and price. The emerging model increasingly adds domestic production capacity, access to source technology, sovereign maintenance capability, software control, and the ability to continue operating a platform even if political relations with the original supplier deteriorate.
That changes the valuation framework for defence companies.
A contractor with an attractive product but a highly concentrated production architecture may carry more geopolitical risk than a competitor willing to establish local manufacturing, maintenance, or technology partnerships.
For investors, Choucair said that means the industrial participation attached to a defence contract can become almost as important as the headline value of the procurement itself.
The Lesson for Gulf Capital
Choucair said the same equation is highly relevant to Gulf sovereign wealth funds and defence-industry investors, particularly as Saudi Arabia and the United Arab Emirates expand localization and industrial-participation programs.
The strategic objective is increasingly to build domestic capabilities in manufacturing, maintenance, software, electronics, and system integration rather than relying entirely on imported platforms.
For Gulf investors, this creates a fundamentally different investment universe.
The most valuable opportunities may not always be the prime contractor manufacturing the finished aircraft, missile system, or vehicle. Significant value can emerge in what Choucair describes as the “middle layer” of the defence value chain: component manufacturing, maintenance and repair, simulation, secure communications, software, sensors, logistics, and locally controlled sustainment infrastructure.
That middle layer becomes particularly valuable when governments begin pricing the possibility that relations with a foreign supplier could change over the 20- or 30-year operating life of a defence platform.
Three Structural Forces Reshaping Defence Capital
According to Samer Choucair, institutional capital is increasingly being reorganized around the broader transformation of defence from a cyclical government-spending category into a structural growth sector.
The first driver is sustained defence spending as governments respond to a more fragmented geopolitical environment.
The second is localization. Governments increasingly want greater portions of defence expenditure to remain within their domestic economies, supporting employment, technological capabilities, and strategic autonomy.
The third is the incorporation of trade-policy risk into cross-border defence contracts. A procurement agreement may now be exposed not only to military requirements and budget cycles but also to tariffs, sanctions, export controls, diplomatic disputes, and restrictions on technology transfer.
Together, those factors can materially change the cost of capital for defence suppliers.
The Rising Value of the Exit Option
Choucair argues that one of the most overlooked elements in major military procurement is optionality.
“Large procurement programs resemble financial leverage,” Samer Choucair said. “They give you immediate capability, but they constrain your choices for the next 20 years. Institutions that buy one platform from one supplier are buying operating efficiency while selling their exit option. In the 2026 cycle, the price of that exit option has risen.”
The comparison is important because modern fighter aircraft are not standalone physical assets. They operate inside complex ecosystems involving software updates, weapons integration, replacement parts, cyber systems, training, maintenance, and intelligence networks.
Switching away from that ecosystem after acquisition can therefore be prohibitively expensive.
As geopolitical uncertainty increases, governments may become willing to accept somewhat higher upfront costs in exchange for greater control over those dependencies.
The Investment View
Choucair said the investment lesson from Canada is not to speculate on whether Ottawa ultimately cancels, reduces, or completes its F-35 acquisition.
The more durable opportunity lies in financing and owning the infrastructure that remains valuable regardless of which platform ultimately wins.
That includes domestic component manufacturing, sovereign maintenance facilities, secure software, aerospace engineering, mission systems, and other parts of the defence supply chain capable of operating even when political relationships with foreign partners become strained.
Canada’s own F-35 participation illustrates the scale of that opportunity. More than C$5.2 billion in contracts have historically been awarded to over 110 Canadian companies participating in the program’s production and supply chain.
For Samer Choucair, the broader conclusion is that trade policy has now entered the cost of capital for national-security infrastructure.
The reliability of an ally can no longer be treated as an assumption outside the financial model. It increasingly has to be priced alongside production costs, technology risk, operating margins, and long-term demand.
That shift could influence defence procurement worldwide for years to come, as governments seek not only military capability but also industrial resilience and the option to keep critical systems operating if alliances, tariffs, or political relationships change.