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Published : 08 Jan 2026, 09:52 AM
President Donald Trump said on Wednesday the 2027 US military budget should be $1.5 trillion, significantly higher than the $901 billion approved by Congress for 2026, boosting defence stocks, but sparking scepticism among budget experts.
Any such increase in the military budget would require congressional authorisation, which could pose a challenge, although Trump's Republicans, who hold slim majorities in both the Senate and House of Representatives, have shown little appetite for objecting to Trump's spending plans.
Trump said in a Truth Social post that he made the decision on 2027 military spending "after long and difficult negotiations with Senators, Congressmen, Secretaries, and other Political Representatives... especially in these very troubled and dangerous times."
In just the last few days, US forces seized Venezuela's Nicolas Maduro from his country, toppling him from power. The White House has also said that Trump is discussing options for acquiring Greenland, including potential use of the US military. Trump has also deployed US troops to police a number of cities across the country.
The news followed a separate Truth Social post from Trump blasting defence companies for producing weapons too slowly. In it he pledged to block defence contractors from paying dividends or buying back shares until they accelerated production.
Trump said the extra spending would be covered by revenues generated by tariffs he has imposed on nearly every country and many industrial sectors, and the US would still be able to reduce its debt and send dividend checks to "moderate income" Americans.
The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimated the proposal would cost $5 trillion through 2035, while adding $5.8 trillion to the US debt with interest. It said only half the cost could be covered by tariffs in place now, noting that the Supreme Court could rule that a large set of tariffs were illegal.
The Bipartisan Policy Center estimates that combined tariffs raised $288 billion in 2025, well below Trump's own estimates, which have fluctuated around $600 billion in recent days.
Byron Callan, a defence analyst with Capital Alpha Partners, said Trump's post raised questions about where the funds would be directed and whether they could even be absorbed by the defence sector.
He said the last time the US Defense Department saw an increase higher than 50% was in 1951 during the Korean War, with even huge surges in military spending under former President Ronald Reagan in 1981 and 1982 amounting to 25% and 20%.
In trading after the market closed, shares in the biggest defence firms rose on the news as investors bet a surge in spending would bolster profits.
Lockheed Martin was up 6.2%, General Dynamics rose 4.4% and RTX added 3.5%.
