By Tim Hepher and Andrew Gray

BRUSSELS (Reuters) -Aerospace companies urged European governments to bolster the autonomy of their defence and space industries and take a clear position on trade as the sector braces for the arrival of a second Trump administration in the United States.

Defence has surged up Europe’s political agenda due to Russia’s 2022 invasion of Ukraine and fears that Washington may cut commitments to European security, particularly after Donald Trump was elected for a second term as U.S. president. 

Meanwhile, Europe’s space industry has embarked on a fresh attempt to bring together parts of its loss-making satellites industry in the face of competition from Elon Musk’s SpaceX and civil aerospace firms are fretting over possible new tariffs.

Guillaume Faury, the chief executive of Airbus, which has announced 2,500 job cuts in space, said on Tuesday that Europe’s space industry needs to restructure and consolidate.

“We are fragmented in a world where some giants have emerged, especially in the U.S., but not only – they are also growing in China,” Faury told a press conference hosted by aerospace and defence lobby group ASD Europe in Brussels.

Airbus and Thales Alenia Space, which includes France’s Thales and Italy’s Leonardo, have said they are in early talks on a possible tie-up of satellite activities even as Europe’s launch industry shows signs of fragmenting, with Italy set to leave operator Arianespace.

Previous efforts to combine foundered when the European Commission signalled opposition on competition grounds, according to people involved in talks over the past decade.

Faury, who last week said Musk’s activities from rockets to satellites would not pass Europe’s anti-trust test, called for regulators to use the global market as their reference point rather than solely preserving competition inside Europe itself.

“Competition is important, but scale is also very important,” he said.

‘MAKE OR BREAK’

Micael Johansson, CEO of Swedish defence firm Saab, said European nations also needed to collaborate more on defence and buy more from European suppliers.

EU defence spending has increased by 31% since 2021 and is expected to reach 326 billion euros ($344 billion) in 2024, according to new European Defence Agency data. That represents 1.9% of the European Union’s gross domestic product.

Trump has said he will insist that NATO members spend more on their own defence, suggesting a target of 3% of GDP.

European arms companies have traditionally had to juggle the priorities of their main national paymasters with the cross-border scale needed to compete globally with U.S. rivals.

“We have to now be approaching … some sort of make or break perspective in terms of how much do we want to collaborate?” Johansson said.

Without more collaboration, “we will never become a competitor compared to the U.S. and other players,” he said.

On trade, Faury said he was waiting for details of sweeping tariffs flagged by Trump during the election campaign but it was important for Europe to be clear about its trade agenda.

Airbus and Boeing were embroiled in a lengthy trade dispute culminating in an 18-month transatlantic tariff war before the EU and United States called a five-year truce in 2021.

($1 = 0.9465 euros)

(Reporting by Tim Hepher and Andrew Gray; Editing by Kevin Liffey, Susan Fenton and Emelia Sithole-Matarise)

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