Trump demands faster arms output, solidifies grip on Venezuela oil, eyes Greenland
(Originally published Jan. 8 in “What in the World“) Trump said he wants to boost the $901 billion U.S. military budget by another 50%.
“Our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars,” Trump posted. “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 record budget Congress approved in December for 2026 exceeded what Trump requested. But since then, Trump has seized Venezuela’s president and its oil industry, while threatening to use military power to annex Greenland from Denmark, leading to fears he has revived the kind of American Imperialism that prevailed during the Gilded Age of robber barons he wants to restore. On Wednesday, U.S. special forces commandeered an empty oil tanker fleeing the U.S. Coast Guard under escort by the Russian navy, while U.S. forces seized another tanker allegedly trying to elude U.S. embargo of Venezuela. The U.S. says both vessels are part of a “shadow fleet” of vessels that China, Iran, Russia, and Venezuela use to evade sanctions.
Defense stock shareholders weren’t thrilled with Trump’s plan, however, since he also said he would block big defense contractors from paying dividends or buying back shares instead of meeting his demands for expanded weapons production.
In doing so, Trump is taking on a longstanding complaint about the U.S. military-industrial complex: Years of increasing oversight and consolidation have resulted in contracting production capacity that have left the industry unable to innovate or expand fast enough to respond to the rapidly changing face of modern warfare and keep up with sudden needs for an expanded arsenal to fight wars like those in Ukraine and the Middle East.
The Pentagon has long worried that the steady supply of weapons to Israel and Ukraine is leaving it with too few to fight what Washington believes is an inevitable war with China. Back in late 2024, when Trump was still campaigning against then-President Joe Biden, the Pentagon published a “National Defense Industrial Strategy” aimed at correcting this problem.
The industry’s own solution has been to convince Congress to give let it negotiate longer-term contracts with the Pentagon that ensure that weapons orders will last long enough to pay for investments in bigger factories. Recent defense budgets have thus included provisions to adjust defense contracts up for inflation. Defense Secretary Pete Hegseth also called earlier this week for longer contracts, but only for companies that “deliver on time and on budget, companies that invest in their people, that invest in more capability and more capacity, not companies that invest in stock buybacks or CEO salaries or more dividends.”