The first few weeks of the Trump administration have been so shocking that even seasoned observers of American politics are having a hard time keeping up. One of the latest proclamations from the President is that he may attempt to cut the American military budget in half. Defence company stocks in the United States declined significantly following the news.

Trump’s argument ties into a broader global strategy that the administration appears to be pursuing. In his latest comments, he said that he would sit down with the Russians and the Chinese and make the case that they should all be spending less of their economic output on their militaries. The argument appears to be roughly similar to the old debates about arms control, only applied to overall military expenditure rather than simply the proliferation of nuclear armaments.

As the President noted in his comments, the American military budget for the fiscal year of 2025 was capped at $895 billion. This is a significant chunk of fiscal space. Consider that the soaring American government budget deficit is around 6.4% of GDP. Military expenditure is around 3.3% of GDP, meaning that if the Pentagon manages to reduce this spending by half, the impact on the budget deficit would be significant.

The same cannot be said for other targets of cuts. While the attack by Elon Musk’s Department of Government Efficiency (DOGE) on USAID will have dramatic consequences both at home and abroad, the savings obtained by cutting the department are not enormous: the total USAID budget is around 0.33% of GDP.

It is well-known that the Pentagon is flabby, with contracts issued on projects of dubious merit. The most glaring of these is the F-35 programme. This so-called “next generation” aircraft has cost the US taxpayer $2 trillion — around 6.5% of annual GDP. Yet the aircraft is known to be extremely dysfunctional and is dubbed a “hangar queen”, alluding to the amount of time the aircraft spends being maintained and repaired. The Tesla boss has called the people who built the F-35 “idiots” and deemed the aircraft “the worst military value for money in history”.

Musk is no doubt eyeing up the potential for taking on Pentagon contracts himself. His company SpaceX now effectively does the job of launching satellites and rockets that Nasa used to carry out, before the agency started to fall apart under bureaucratic inertia. Musk and his team are starting to size up what American military contractors are actually producing and thinking that they can do it cheaper and better. Trump’s words are sending ripples through the defence-industrial complex across the West, striking fear into contractors who have long enjoyed effective monopolies on contracts for military procurement.

Over the weekend, Keir Starmer announced that he would be overriding Rachel Reeves to increase British military spending. The UK’s Prime Minister is known to exercise limited control over his own government, his approach to leadership likened to a driverless train by those who have worked with him. The British defence-industrial complex may have convinced Starmer to turn on the taps by telling him that it was necessary for national security. But given the timing, it looks more like a group of people getting one last grab at the government teat before hard questions start being asked about the cost and quality of the products they are delivering.

Trump’s first few weeks have shown that he and his allies are willing to engage in policy that can only be described as “revolutionary”. They are willing to go up against entrenched interests in both the government and the private sector. So far, they seem to be steamrolling their opponents. If the Trumpian revolution continues, it looks set to massively disrupt long-established interest groups across the world. The President’s latest comments suggest that the Western defence-industrial complex — which has failed to deliver so completely during the Ukraine war — is next on the chopping block.

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Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics

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