The Trump administration’s FY2026 budget proposal includes a significant increase in defence spending, with a total defence spending slated to receive a discretionary base budget of USD1.01 trillion. While the budget shows key areas of continuity between administrations, it notably deviates in allocating funds for the Pentagon to support border security and drug interdiction.
On 2 May 2025, the United States Office of Management and Budget (OMB) released President Donald Trump’s FY2026 topline discretionary budget request to Congress. Described by the White House as the ‘skinny budget’, the request strips USD163 billion from government spending as the administration continues to reshape the US federal government.
Despite deep cuts across almost all government areas, defence saw a significant increase, with the discretionary base budget receiving a potential 13.4% uplift to USD1.01 trillion, up from an enacted budget of USD892.6bn the year before. However, the entirety of this increase relies on parallel proposals to inject USD119.3bn into defence funding next year, with these proposals now needing to be reconciled with the main budget.
Notwithstanding the proposed increases, military requirements remain firm. Indeed, the FY2026 budget and proposed increases signal considerable continuity with areas of President Joe Biden’s approach, albeit without the congressional restrictions that curtailed investment spending. These include force readiness, munitions production and improving the quality of life for military personnel. Other areas, such as missile defence and national shipbuilding, were also prominent features of past budgets, though these differed in emphasis and scale over time. However, the allocation of additional funds for the Department of Defense (DoD) to support border and counter-drug missions marks a notable departure from past practice.
One trillion dollars…
Prior to the OMB’s budget, on 27 April, lawmakers from the House and Senate Armed Forces Committees proposed to increase the US defence budget by a further USD150bn over the next nine years. The reconciliation bill was drafted ‘in close conjunction with the White House’, with the FY2026 budget assuming USD119.3bn from the proposed total. Combined with a request of USD892.6bn, the FY2026 discretionary defence budget will just exceed US Secretary of Defense Pete Hegseth’s ambition of reaching USD1trn. As a proportion of GDP, this would come to 3.2% in FY2026, just above Hegseth’s stated minimum of 3% of GDP for defence.
Yet, any increase relies on new funding being made available: the requested base budget matches Biden’s FY2025 enacted budget and remains flat in dollar terms, decreasing by 2.5% in real terms after inflation is considered.
The reconciliation process may allow lawmakers to avoid procedural blocks, such as filibusters, to push planned increases, particularly as Republicans control the House of Representatives and Senate. Support is not guaranteed, however, particularly amongst fiscally conservative lawmakers and those concerned about eroding US military pre-eminence who do not consider the budget to be sufficient. Previously, the Fiscal Responsibility Act (FRA) introduced limits on defence spending, prompting Biden’s later defence budgets to emphasise force readiness over modernisation. While FRA constraints ended in January 2025, giving greater theoretical room to increase spending, warnings from the Federal Reserve of an economic slowdown suggest that there is only limited room to increase defence spending sustainably. Moreover, current plans assume that the majority (80%) of the USD150bn will be allocated during FY2026, suggesting that these funds will effectively be a one-off increase, rather than a long-term uplift.
Renewed emphasis and new priorities
Within total defence spending, the DoD is expected to receive USD961.6bn in base discretionary funding, up from the previous year’s enacted budget of USD848.3bn. Assuming the reconciliation bill passes intact, the FY2026 budget outlines seven priority areas, including enhanced missile defences. Known as the ‘Golden Dome’, plans for a ‘next-generation missile defense shield’ are now a signature administration policy, with Trump announcing plans to develop the system on 20 May. To this end, the FY2026 budget ‘makes a down-payment on the development and deployment’ of the system. The April 2025 bill proposes an additional USD24.7bn in mandatory funding to support this. This will go towards the development and deployment of ‘new space and terrestrial based capabilities to detect and interdict missiles’, including ‘hypersonic missiles bound for the homeland with kinetic and non-kinetic means’, as well as funds to accelerate the deployment of ongoing missile defence systems and improve existing related infrastructure.
Another beneficiary of the FY2026 budget is naval shipbuilding, which has long struggled to deliver projects on time and on budget. According to the US Government Accountability Office, a key challenge is that some shipyards lack the physical space to meet desired workloads and timelines. Ageing infrastructure at some sites has also impeded progress, as has a lack of skilled workers. To address this, the FY2026 budget prioritises investment in America’s shipyards and industrial base, with lawmakers proposing an additional USD33.7bn in mandatory funding to enhance shipbuilding resources. This includes money ‘to improve infrastructure and expand capacity at private shipyards and throughout the maritime industrial base supply chain’. Within that, the proposed legislation provides USD450 million for workforce development and a further USD750m slated to strengthen suppliers. Such efforts will reduce some pressure in meeting the US Navy’s 2025 Shipbuilding Plan, which sees a decrease from today’s force of 295 battle-force ships, to 283 ships in 2027, before rising to 390 ships in 2054.
Other beneficiaries include the US nuclear mission, with the budget calling for continued modernisation. US lawmakers are similarly requesting an additional USD12.9bn in mandatory funding to accelerate modernisation, improve readiness and improve the ‘infrastructure and expand the scientific and production capacity of the nuclear enterprise’.
Regarding conventional weapons, the FY2026 budget is slated to fund the F-47 Next Generation Air Dominance platform. To support this, the bill proposes an additional USD7.2bn in mandatory funding to boost current capabilities by acquiring additional and modernising existing aircraft. In addition to new aircraft, lawmakers requested funding to prevent the retirement of F-22A and F-15E aircraft. Alongside bolstering platforms, Russia’s unprovoked full-scale invasion of Ukraine prompted increasing concern about ‘magazine depth’ among Western policymakers. Indeed, the emergence of novel technologies such as first-person view uninhabited aerial vehicles on the battlefield has shown the benefits of cheap and plentiful supplies. Though not emphasised in the FY2026 budget, in addition to increasing national stocks of munitions across the land, sea and air domains, US lawmakers have earmarked USD4.5bn for the Industrial Base Fund as well as USD13.5bn to scale the production of low-cost weapons.
New priorities
The FY2026 budget aligns with the Trump administration’s Interim National Defense Strategy. Though the document has not been released publicly, it reportedly emphasises border security and drug interdiction, including expanding the military’s role. The memo reportedly instructs the Pentagon to counter illegal migration, drug and human trafficking, and support deportations in coordination with the Department of Homeland Security (DHS). To this end, border security is listed in the FY2026 DoD budget priorities with lawmakers proposing an additional USD5bn for the DoD to support DHS missions through the deployment and operation of military personnel.
Similarly, the US appears to be consolidating the financial groundwork for any US pivot away from Europe towards the Indo-Pacific, with US lawmakers proposing an additional USD11.1bn to improve Indo-Pacific Command’s capabilities, with no additional funds to Europe.
Outlook
From first glance, the proposed FY2026 budget shows key areas of continuity between administrations, such as efforts to enhance munition stocks and increase readiness, while there has also been increased funding for missile defence and shipbuilding. The most significant changes are reflected by the expansion of the DoD mission via its support to the DHS through deploying US forces to border areas. That said, the budget is likely to suffer pushback over concerns of its affordability and sustainability, particularly as growing economic headwinds and a slowing economy may make budget increases harder to justify.