Trump seeks 50% hike in defense budget to $1.5 trillion

by AFP Staff Writers
Washington, United States (AFP) Jan 7, 2026

President Donald Trump said Wednesday he wanted to increase the US defense budget by half next year to a giant $1.5 trillion to deal with "troubled and dangerous times."

Trump has frequently employed the US military -- which is currently funded at record spending levels -- since returning to office, including strikes on Yemeni rebels, Iranian nuclear sites and alleged drug-smuggling boats, as well as a brazen special forces raid to seize Venezuelan leader Nicolas Maduro.

"I have determined that, for the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars," Trump said on Truth Social.

"This will allow us to build the 'Dream Military' that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe," the president said.

Trump said the increase is possible due to revenue from the sweeping tariffs he has imposed on friend and foe alike.

The United States is already by far the world's biggest military spender, and a hike to $1.5 trillion would push Washington's financial outlay on its armed forces even farther ahead of its rivals China and Russia, though it could also spark an arms race with such countries.

- Trump slams defense companies -

Trump's announcement on boosting the US military budget comes after NATO allies committed last year to increase their defense spending to five percent of GDP by 2035 in response pressure from the US president.

Even as he announced a budget goal that would be a major boon to defense contractors, Trump took aim at them in posts on Truth Social.

Defense contractors are "issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment," while pay packages for defense executives are "exorbitant and unjustifiable," Trump said.

The president said salaries should be capped at $5 million and that he would prohibit stock buybacks and dividends "until such time as these problems are rectified," without specifying how he would do so.

The announcement took the markets by surprise, sending US companies in the defense sector -- such as Lockheed Martin and General Dynamics -- more than four percent lower. Northrop Grumman lost more than five percent.

Trump took aim at Raytheon specifically, saying the Defense Department told him the company was the "least responsive" to its needs and the "slowest in increasing their volume."

Raytheon must boost its investments in plants and equipment, Trump said, threatening it with a loss of US government business if it does not comply.