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Trump unveils $1.5tn defence spending plan
Former US President Donald Trump has called for a sharp increase in military expenditure, proposing a $1.5tn (£1.1tn) defence budget for 2027-over 50% higher than this year's $901bn allocation approved by Congress in December.
Trump described the proposal as essential for building a "Dream Military" capable of ensuring national security amid what he termed "very troubled and dangerous times." The announcement was made via social media on Wednesday.
Pressure on defence contractors
In separate posts, Trump threatened to restrict payouts to executives and shareholders of major US defence firms unless they accelerate arms deliveries and expand manufacturing capacity. He criticised what he called "massive" shareholder dividends and stock buybacks, arguing they come at the expense of production investments.
Trump also targeted executive compensation, stating no defence industry leader should earn more than $5m annually-a fraction of current packages, which he labelled "exorbitant."
Market reaction and industry criticism
Shares of leading defence contractors, including Lockheed Martin, Northrop Grumman, and Raytheon, surged by over 5% in extended New York trading following the announcement.
Raytheon faced particular scrutiny, with Trump accusing the company of being the "least responsive" to US defence needs and the slowest to boost production. He warned that unless Raytheon increases investment in new plants and equipment, it risks losing contracts with the Department of Defense. The BBC has reached out to Raytheon for comment.
Economic and geopolitical context
Trump dismissed concerns about the sustainability of the US budget deficit, claiming tariff revenues would easily cover the proposed $1.5tn defence budget. Economists have previously warned that the gap between US spending and income has reached unsustainable levels.
The call for higher defence spending comes as global tensions escalate. On Wednesday, the US military intercepted a Russian-flagged oil tanker suspected of violating sanctions. This followed the weekend capture of Venezuelan leader Nicolás Maduro by US forces, who was taken to America to face drug trafficking charges.
Meanwhile, China conducted military drills around Taiwan in December, simulating a blockade of the island in a move seen as a warning to Taipei. Beijing, which claims Taiwan as its territory, has also expressed anger over the island's efforts to strengthen its defences this year.
Trump's long-standing push for military expansion
Trump has consistently advocated for increased defence spending by the US and its allies since his first term in office. In his latest posts, he reiterated that military equipment production is too slow and urged companies to modernise their facilities to meet demand.
