Prime Minister Giorgia Meloni wants to refocus the bloc's help on lowering the cost of living for Italians, as energy costs have soared amid the Iran war.
The deal marks a shift from Boeing to Airbus for the Italian Air Force, which flies four Boeing 767-based tanker aircraft which entered service from 2011.
“Today we have other priorities. I have the priority of energy costs and the priority of responding to the needs of citizens," said the prime minister.
The announcement marks a change for Italy, which has been a loyal ally to Israel for years and has been viewed by Trump as a trusted partner in Europe.
Use of the Sigonella air base for the U.S.-Israeli war against Iran falls outside of the scope of agreements, requiring parliamentary approval in Rome.