Overview
- The White House order bars dividends and stock buybacks for contractors deemed underperforming until production and delivery standards are met.
- Trump paired the order with a proposal to lift the 2027 defense topline roughly 50% above the about $901 billion set for 2026.
- Defense stocks fell after criticism of payouts and executive pay, then rallied on the prospect of a larger budget and future contracts.
- Budget analysts dispute Trump's assertion that tariff revenue could easily finance the increase, estimating large shortfalls and added debt.
- Any budget hike and lasting restrictions will require congressional action and contract mechanisms, and the Pentagon must now name lagging firms.