US President Donald Trump is sitting at the White House oval office in Washington on February 13, 2025.
Kevin Lamarck | Reuters
Defense stocks fell sharply Thursday afternoon after President Donald Trump suggested that the US could cut defense spending significantly.
Trump said Thursday in the White House that the US could cut defense spending in half at some point in the future. The comments came in the context of Trump discussing potential meetings on defence spending between China and Russia.
“At some point, once things settle, I’m going to meet China, especially with two Russias. As for the military… And we say we can spend this on other things. I’m going to do it,” Trump said.
“When we straighten it, one of the first meetings I hope for is Chinese President XI and Russian President Putin. And they say they’ll cut our military budget in half. I want to. I think we can do that,” he added.
Defence stocks, which were high earlier that day, quickly fell. Stocks Lockheed Martin 1.6% decrease Northrop Grumman 3.4% was sunk General dynamics We lost 2.1%.
Trump sent a mixed message about military spending throughout his 2024 campaign and early in his presidency.
On the one hand, Trump has registered with Elon Musk and the so-called government efficiency to find a place to cut costs across the government. Trump is also seeking a quick resolution of the war in Ukraine, including the purchase of many American weapons.
Meanwhile, he touted the importance of having a strong army and signed an executive order to explore the construction of a “American Iron Dome” missile defense system. Trump also said Thursday that the US has “the world’s largest military equipment.”
“People are now confused by a lot of different cross-currents,” TD Cowen policy analyst Roman Schweizer told CNBC last week about defense spending.
