President Donald Trump has proposed a sharp rise in US defence spending, calling for a $1.5 trillion defence budget in 2027. He described the move as necessary for what he called “very troubled and dangerous times” facing the world today.
If approved, this plan would mark more than a 50% increase compared to the current $901 billion defence budget, which Congress approved in December. Trump said the increase would help the US build what he referred to as a “Dream Military”, capable of keeping the country safe and secure against any enemy.
Trump Says Tariffs Can Fund Higher Military Spending
Despite economists warning that the gap between US government spending and revenue has reached unsustainable levels, Trump argued that the US can “easily hit” the $1.5 trillion target. According to him, revenue generated from tariffs would help support the expanded defence budget without harming national finances.
Trump has consistently supported higher military spending since his first term in office, often urging both the US and its allies to invest more heavily in defence.
Pressure on Defence Contractors to Increase Production
Alongside his budget proposal, Trump announced plans to crack down on major US defence contractors. He warned that companies would face restrictions on executive payouts and shareholder rewards unless they significantly speed up weapons production and build new manufacturing facilities.
Trump criticised defence firms for focusing on stock buybacks and shareholder profits rather than investing in factories, equipment, and faster delivery of military hardware. He also targeted what he described as “exorbitant” executive compensation in the defence industry.
“No Executive should be allowed to make in excess of $5 Million Dollars,” Trump said, arguing current pay levels are far higher than justified.
Defence Stocks Surge After Trump’s Announcement
Following Trump’s statements, shares of major defence companies rose sharply in after-hours trading in New York. Stock prices for Lockheed Martin, Northrop Grumman, and Raytheon each climbed by more than 5%, reflecting investor optimism around increased military spending.
Raytheon Singled Out for Slow Response
In a separate post, Trump specifically criticised Raytheon, calling it the least responsive defence contractor when it comes to meeting America’s military needs. He warned that unless the company invests heavily in new plants and equipment, it could lose future contracts.
Trump stated that companies unwilling to expand production capacity “will no longer be doing business with the Department of War.” Raytheon has been contacted for comment on the remarks.
Rising Global Tensions Drive Defence Push
Trump’s call for expanded defence spending comes amid heightened geopolitical tensions worldwide. On Wednesday, the US military captured a Russian-flagged oil tanker suspected of breaching US sanctions.
This followed the arrest of Venezuelan leader Nicolás Maduro, who was taken to the United States to face drug trafficking charges. In Asia, China conducted military drills around Taiwan in December, simulating a blockade of key areas as a warning against what Beijing calls “separatist forces.”
Taiwan’s decision to boost its own defence budget this year has further angered China, which continues to claim the self-governing island as its territory.
