Unusual Machines, which previously disclosed Donald Trump Jr. as an adviser, is leading the rally

Drones, observes the White House, have emerged as a "key technology in modern armed conflict."

Defense stocks are climbing on Friday after the White House slapped new tariffs on foreign-made drones and components.

Larger drones that have militarily sensitive capabilities, like thermal imaging, as well as "critical" drone components will be subject to a 100% tariff. Smaller drones and less significant components will be hit with a 25% duty, the White House said.

Reduced tariffs were also imposed on drones from select countries, including Japan and the United Kingdom. Most of the duties will go into effect next month, the White House said, though tariffs on drones and components that aren't "particularly sensitive" will be activated in six months.

In a statement, the Trump administration called drones a "key technology in modern armed conflict." Domestic production "needs to be expanded rapidly to ensure U.S. national and economic security," the statement said.

The tariff announcement was welcomed by investors in U.S. drone companies, including Unusual Machines (UMAC), which jumped 21%. In 2024, the company disclosed that President Donald Trump's son, Donald Trump Jr., was an adviser, and a separate filing from that time showed that the president's eldest son owned 331,580 shares of Unusual Machines.

Red Cat shares (RCAT) rose by 7%, while AeroVironment $(AVAV)$, Kratos Defense and Security Solutions $(KTOS)$, Northrop Grumman $(NOC)$ and Aevex $(AVEX)$ also rallied. Ondas $(ONDS)$, after reporting mixed second-quarter earnings on Thursday, was up 3%.

The tariffs are the latest push by the U.S. to encourage manufacturers to bring production onshore and reduce reliance China, which dominates the drone market. In 2024, the Atlantic Council think tank estimated that China controlled 90% of the U.S. drone market and 80% of the global market.

Last December, the Defense Department launched the "Drone Dominance" program, a $1 billion initiative meant to accelerate domestic drone manufacturing. Trump's fiscal 2027 budget proposal, which seeks $1.5 trillion in defense spending, also calls for bolstering American drone production.

-William Gavin