Quick overview

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President Donald Trump called for a $500 billion annual increase in defense spending in a bewildering series of social media posts on Wednesday.

Major defense contractor shares plummeted as traders tried to decipher the White House’s intentions and whether they would ever materialize in light of the seemingly contradictory series of announcements.

 

It all started with a demand that addressed a long-standing issue for Trump: major government-affiliated defense contractors must cease stock buybacks, cease paying dividends, and cap executive compensation at $5 million annually until they increase their investments in factories and research to accelerate development. Trump codified the decision in an executive order a few hours later.

Additionally, he specifically mentioned RTX Corp. in another post. manufacturer of the well-known Patriot missile system
Whether a president can order how private businesses allocate their capital is still up for debate. However, while denouncing RTX, Trump also promised to increase defense spending by more than 50% to $1.5 trillion for 2027, a move that would generate significant profits for the company and its competitors. He made this demand via social media once more. Trump posted on social media, saying, “This will enable 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 rush of actions was both unexpected and consistent with earlier statements made by Trump and Defense Secretary Mark Esper, not Pete Hegseth. In a speech in November, Hegseth called defense contractors accountable and threatened to “fade away” if they didn’t increase their spending on accelerating the production of weapons.

In addition, the administration’s military operations in Iran, Syria, Somalia, Nigeria, Venezuela, and other places during Trump’s first year have only increased its reliance on defense firms. According to the Military Times, the administration has already supervised at least 626 airstrikes, and that was before the attempt to remove Venezuelan President Nicolas Maduro.