US President Donald Trump has proposed a dramatic 50 per cent increase in the United States defence budget for fiscal year 2027, seeking to raise it from around $1 trillion to $1.5 trillion. The announcement on Wednesday came as Trump described the world as being in “troubled and dangerous times” and argued the larger budget would help build what he called a “Dream Military”.
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Trump made the proposal public in a post on his social media platform, saying the higher defence spending would keep the country “SAFE and SECURE, regardless of foe.” He claimed that revenue from sweeping tariffs imposed on foreign countries would make the expansion possible and benefit the US economy, though analysts say tariff income alone is unlikely to cover such an increase.
— Rapid Response 47 (@RapidResponse47) January 7, 2026
— Rapid Response 47 (@RapidResponse47) January 7, 2026
— Rapid Response 47 (@RapidResponse47) January 7, 2026
The proposed $1.5 trillion budget, if approved by Congress, would mark the largest military spending level in US history, far outpacing the current 2026 allocation of about $901 billion. Trump’s Republican allies control both chambers of Congress but must still agree on the final budget, meaning the proposal faces political negotiation ahead.
In addition to the budget request, Trump criticized major US defence contractors, accusing them of excessive dividends and stock buybacks instead of investing in production capacity. He urged capping executive pay and threatening to withhold contracts from firms that do not improve output, sparking sharp movements in major defence sector stocks.
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The proposal arrives amid heightened US military activity abroad and pressure on NATO allies to boost their defence spending benchmarks to 5 per cent of GDP by 2035. While supporters describe the plan as necessary for national security, critics warn it could fuel an international arms race and deepen budget deficits.