US President Donald Trump has issued a stern warning to defense contractors that supply the US military, accusing them of profiteering.
In a post on Truth Social on Wednesday, he threatened to take action if companies do not take concrete action, including limiting executive compensation, investing in building factories and producing military equipment more quickly.
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“Military equipment is not being built fast enough,” Trump wrote in a lengthy 322-word post.
“We must build now with dividends, stock buybacks, and excessive executive compensation, not with borrowing from financial institutions or government funding.”
President Trump named the technology company Raytheon as the worst offender in his eyes.
In a later post, President Trump said, “We have heard from the Department of the Army that the defense contractor Raytheon is the least responsive to the Department’s needs, the slowest to increase business volume, and the most aggressive in spending for shareholders over the needs and demands of the U.S. military.”
The president threatened to sever government ties with Raytheon (now known as RTX), which makes billions of dollars in defense contracts.
Just last August, the Pentagon awarded the company the maximum amount available, $50 billion, for a 20-year contract to supply equipment, services and repairs to the military.
President Trump warned, “Our country comes first, and they’re going to have to learn that the hard way.”
Defense spending supports a significant portion of the U.S. economy. As of 2024, Department of Defense spending represents approximately 2.7% of U.S. gross domestic product (GDP).
The total defense budget typically totals about $1 trillion. But President Trump announced in a post on Truth Social Wednesday night that he would petition Republicans in Congress to increase that amount to a record $1.5 trillion in fiscal year 2027.
“This will allow us to build the ‘army of our dreams’ to which we have long enjoyed the right, and more importantly, will keep us safe and secure, no matter our enemy,” Trump wrote.
Still, Trump’s threats sent defense contractor stocks plummeting as the future of the high-stakes industry remains uncertain.
Since taking office for his second term, President Trump has taken a proactive and pragmatic approach to private companies related to national security concerns.
In June, for example, the Trump administration was given “golden shares” in metals company U.S. Steel in exchange for greenlighting a merger with Japan’s Nippon Steel. This share effectively gives the Trump administration a veto over any major actions that U.S. Steel may take toward restructuring or dissolving the company.
And in August, technology company Intel, under pressure from President Trump, signed a deal to sell a 10% stake in the company to the U.S. government.
The Trump administration continues to acquire stakes in other private companies, particularly mining companies involved in producing rare earth minerals and other raw materials used in technology.
It is not yet clear how President Trump intends to enforce the demands against defense contractors that he denounced in a social media message Wednesday. It is also unclear whether Trump can legally enforce his orders.
But President Trump has released a list of complaints against companies, including that executives are simply paid too much.
“Defense industry executive compensation is outrageous and unjust given how slow these companies are in delivering critical equipment to our military and allies,” he wrote at one point.
At other times, he has called on private companies to invest in new construction projects, something he has urged in every industry from pharmaceuticals to automakers.
“Starting this moment, these executives must build new, modern production plants to deliver and maintain this critical equipment and to build the latest models of future military equipment,” President Trump said.
“Until we do that, no executive should be allowed to earn more than $5 million, which may sound like a lot, but it’s only a fraction of what they currently earn.”
He also complained that defense companies were “too slow” in offering to repair equipment.
Defense contractors are responsible for a wide range of services and products, from software to training to missiles and tanks. For example, RTX designed the Patriot missile, the United States’ flagship surface-to-air missile system, and continues to supply the U.S. military with spare parts and other updates.
The Virginia-based company had sales of more than $80 billion in 2024. Just this week, the U.S. Federal Aviation Administration (FAA) awarded RTX a $438 million contract to update its radar system.
Still, Trump argued that too much of that revenue goes to shareholders, executive compensation and companies buying their own stock to limit supply and increase value.
“Defense contractors are now paying huge dividends and massive stock buybacks to shareholders at the expense of investments in plant and equipment and at a disadvantage,” President Trump wrote.
“This situation can no longer be tolerated, it cannot be tolerated!”
