Trump US defense contractors 2026: A $1.5 Trillion Ultimatum and Executive Pay Caps
President Trump targets US defense contractors in Jan 2026, threatening executive pay caps and demanding more production while proposing a $1.5T budget.
President Donald Trump is dangling a carrot worth $1.5 trillion, but it comes with a very heavy stick. In a series of provocative statements, he's warned the military-industrial complex that the days of unchecked profiteering are over.
Trump US defense contractors 2026: Cracking Down on Profits
On January 7, 2026, Trump issued a stern ultimatum to defense firms via Truth Social. He accused contractors of prioritizing dividends and stock buybacks over national security. His demand is clear: companies must build new production plants and accelerate equipment delivery, or face the consequences.
The most striking part of his demand is a proposed cap on executive compensation. Trump stated that until these companies modernize their production capacity, no executive should earn more than $5 million per year—a figure he described as a "mere fraction" of their current earnings.
Targeting RTX and the $1.5 Trillion 'Dream Military'
Trump singled out RTX (formerly Raytheon) as the prime example of what he calls an "unresponsive" contractor. This criticism comes despite RTX receiving a 20-year contract worth $50 billion in August 2025. The president threatened to sever ties with the Virginia-based firm, which reported sales exceeding $80 billion in 2024.
Simultaneously, Trump announced plans to petition for a record $1.5 trillion defense budget for fiscal year 2027. This massive increase from the current $1 trillion level aims to build a "Dream Military." However, the markets reacted with uncertainty, as defense stocks plummeted following the threats of heavy-handed government intervention.
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