‘Dream military’: Trump unveils 50% defence budget hike as tensions rise with Greenland, Colombia, Mexico

US President Donald Trump has announced a major expansion of the American defence budget, proposing a 50 per cent increase that would raise military outlays to $1.5 trillion in 2027. The move arrives amid intensifying international tensions, particularly in South America and the Caribbean, and signals a dramatic shift in US military strategy and spending priorities.

The new plan would build on an estimated $175 billion in added defence spending already enacted under recent Republican legislation. The current military budget for 2026 stands at $901 billion. Trump described the expanded spending as a step towards creating a "Dream Military" that would keep the country "SAFE and SECURE, regardless of foe."

Trump asserted that sharply higher tariff earnings would support the proposed defence spending, declaring the revenues generated would have been "unthinkable in the past." He claimed this financial windfall would allow the administration to strengthen the military, address national debt, and benefit moderate-income Americans.

The US government collected $288.5 billion from tariffs and excise taxes last year, a significant increase from $98.3 billion in 2024, according to the Bipartisan Policy Center.

Alongside the budget announcement, Trump issued a direct warning to major defence contractors, specifically targeting Raytheon. He stated: "Either Raytheon steps up, and starts investing in more upfront Investment like Plants and Equipment, or they will no longer be doing business with Department of War."

He further said that if Raytheon wants to do business with the US government, they will not be allowed to undertake additional stock buybacks till "they are able to get their act together". 

The president’s new policy included an executive order directing the Pentagon to review contractors’ performance and limit stock buybacks and executive pay tied to government contracts. Major defence firms, including Raytheon’s parent RTX Corp, saw share prices fall following the remarks, as investors reacted to the threat of lost government business.

The administration’s more assertive posture follows the recent US operation to seize Venezuelan President Nicolás Maduro and transfer him to the United States on drug trafficking charges. US military assets are now concentrated in the Caribbean, while Trump has also raised the prospect of asserting control over Greenland and suggested potential military action in Colombia.

On regional relations, Trump posted: "It was a Great Honor to speak with the President of Colombia, Gustavo Petro, who called to explain the situation of drugs and other disagreements that we have had," adding, "I appreciated his call and tone, and look forward to meeting him in the near future." Days earlier, Trump said, "Colombia is very sick too" and accused Petro of "making cocaine and selling it to the United States."

Meanwhile, as the US hardens its stance towards Cuba, Mexico has emerged as a key supplier of crude oil to Havana. Mexican President Claudia Sheinbaum stated, "with the current situation in Venezuela, Mexico has become an important supplier," but insisted, "no more oil is being sent than has been sent historically; there is no specific shipment." Sheinbaum added that oil deliveries occur through "contracts" or as "humanitarian aid."