In the latest episode of “Talking Trade,” John Gatto of Transatlantic Strategy Group says “decades-overdue” German defense spending creates new opportunities for U.S. businesses.

Gatto is the founder and managing director of the Milwaukee-based international business and government relations firm, which helps clients navigate the regulatory environments of the United States and Europe.

He discusses how recent developments in U.S. foreign policy have led to changes in Germany, which is putting more funding into defense after President Donald Trump pressured it and other NATO members to contribute more to the military alliance.

“We are putting money behind defense which has historically never been there,” said Gatto, who grew up in Germany. “There was a defense budget, but it was very, very, very small. All of a sudden, within one fell swoop, you have a trillion euros in additional defense spending in Germany alone.”

That’s in addition to about $870 billion in proposed European Union defense spending, he noted. While Germany, France and other NATO countries are ramping up their ability to defend themselves militarily, their economies alone won’t be able to fulfill this rising demand, according to Gatto.

“The funds are there, but the capabilities are not really there,” he said. “And that’s where I identified tremendous opportunity for U.S.-based companies.”

That includes Wisconsin manufacturers such as Oshkosh Defense, smaller suppliers of technical components in the state, as well as bigger companies elsewhere in the country including Lockheed Martin and Boeing.

Gatto says the “political volatility” in Europe and elsewhere is shaping investment and business decisions around the world. He pointed to a shift from “just in time” manufacturing to a “just in case” approach in the post-COVID era, as companies are stocking more supplies and products than they did before the pandemic.

“Many people are now focusing on supply chain resilience, diversifying their supply chain,” he said, adding “the defense industry has historically been a very well-established and settled marketplace, but there’s so much more opportunity for new players now.”

Talking Trade is hosted by E.M Wasylik Associates Managing Director Ken Wasylik and M.E. Dey & Co. President and Managing Director Sandi Siegel.