- Feb 27
- 4 min read
KUALA LUMPUR, Malaysia, Feb 27 2026 (IPS) - As US President Donald Trump pushes the world to war, arms spending has been rising worldwide. Wars secure more budgetary allocations, mainly benefiting the US-dominated military-industrial complex.
US military spending increases
After bombing Venezuela, the Trump administration raised its war budget from $1.0 trillion, 47% of discretionary government spending in 2024, to $1.5 trillion!
In 2024, the US accounted for over 36% of the world’s military spending of $2.7 trillion! This exceeded the total expenditure of the next nine biggest spenders – China, Russia, Germany, India, UK, Saudi Arabia, Ukraine, France, and Japan!
China’s military budget for 2025 was $250-300 billion. Most others are US allies who have pledged to increase war spending from under 2% of GDP to 5%!
The US and its allies will be even further ahead despite pushing friends and foes to spend more. Fortune magazine projects that US spending will exceed that of the next 35 highest-spending countries combined!
Despite its huge economic costs, the hike is being justified as helping to achieve ‘peace through strength’. After all, bombing ten nations in Trump 2.0’s first year did not incur any significant American military casualties.
Borrowing for war
Early this year, Dean Baker warned that President Trump was planning to increase annual military spending by $600 billion. Just under 2% of GDP, the spending increase would be massive.
As Trump is more committed to cutting taxes than the US federal public debt, the “$600 billion increase in annual taxes would come to $6 trillion, roughly $45,000 per household” over the next decade.
The independent Committee for a Responsible Federal Budget projects federal debt for military spending will increase by $5.8 trillion over the next decade!
Trump has long promised to cut US public debt, which is already equivalent to 120% of annual output, and not to increase the deficit! But this would require massive tax increases, impossible to raise with tariffs alone.
Worse, federal government debt, which Trump promised to cut, will rise. Meanwhile, 94% of his Big Beautiful Bill (BBB) tax cuts benefit the top 60%, with only 1% trickling down to the poorest fifth.
The top fifth nominally gets 69%, but only the top 5% will actually pay less! The bottom 95% will pay more tax, with low-income households paying relatively more for tariffs!
Trump’s Department of Government Efficiency (DOGE), led by Elon Musk, was supposed to cut federal government fraud, waste, and debt, but instead cut US growth in 2025’s last quarter.
While the BBB cut $186 billion of food aid for poorer Americans, rising war spending will mainly benefit US military-industrial complex cronies.
US consumers will pay more
Increased tariff rates would have to be impossibly high. And these would need to be even higher if exemptions are granted. Imports would fall sharply with such high tariffs.
Trump claimed additional tariff revenue would cover half a trillion dollars of additional military spending. He has long claimed other countries pay for tariffs.
With deindustrialisation over the past half-century, consumers have been buying more imports, paying for most tariff revenue.
Imports would fall sharply with such high tariffs. As many imports are intermediate goods used in manufacturing, high tariffs would hurt the industries Trump is claiming to promote.
High tariffs will raise consumer prices sharply. Cost-of-living increases would be unaffordable to many, including in Trump’s political base.
Before the 20 February Supreme Court decision declaring them unconstitutional, the tariffs were only expected to raise $300 billion in the first year.
Revenue was expected to fall as consumers bought more domestically produced goods instead of imports.
As many intermediate goods for manufacturing are imported, higher tariffs would hurt the very industries Trump claims to be helping. Thus, high tariffs will sharply raise consumer prices for both imports and US-made substitutes.
Also, massively increasing military spending will divert resources, including labour, away from more productive uses.
Military industrial cronies
US military contracts mainly went to five corporate groups even before Trump 2.0. While projects are worth more, beneficiaries are fewer, reflecting lobbying efforts.
More government military spending is unlikely to increase jobs in the long run, as jobs have decreased drastically since the 1980s due to greater automation.
Military contractors pass the costs of R&D and capital expenditures onto taxpayers, freeing revenue to pay for cash dividends and stock buybacks.
In 2024, the Pentagon’s leading contractor, Lockheed Martin paid out $7 billion for stock buybacks and dividends.
Although Trump once offered to work with China and Russia to cut the trio’s military spending by half, it was difficult to take his offer seriously given his other pronouncements and actions.
US military spending will continue to rise, driven by the same interests and impulses behind the recent massive hikes.
Military expenditure needs wars to secure yet more allocations for buying more military equipment, to the beat of war drums.
The actual political and business relationships are complex and ever-changing. As Walter Scott observed in 1808:
Oh, what a tangled web we weave,
When first we practice to deceive
Related IPS Articles
Available online at: Massive US War Spending Hike Raises Debt, Taxes, Doubts
