The Donald Trump administration on Wednesday (local time) asked Pentagon to cut down its budget by 8% annually or by $290 billion withing the next five years.
Defense Secretary Pete Hegseth directed the Pentagon to draft deep budget reductions, according to The Washington Post, which cited a memo on the matter.
The Pentagon’s 2025 budget stands at approximately $850 billion, with bipartisan agreement among lawmakers that such substantial spending is necessary to counter global threats, particularly from China and Russia. However, if the proposed cuts are fully implemented, the budget would shrink by tens of billions annually, reaching around $560 billion within five years.
While specifics on where the reductions would fall remain unclear, a previous Post report suggested that junior civilian employees—not uniformed military personnel—were the primary targets.
The move follows a visit to the Pentagon by Elon Musk’s Department of Government Efficiency last week and is expected to face strong opposition from both the military and Congress.
With the Pentagon facing potential budget cuts, the US defense spending—currently around 3.4% of GDP—would move even further from the five percent threshold some policymakers have advocated.
The news sent shockwaves through the defense sector, causing stock fluctuations among major US contractors. Lockheed Martin saw a brief dip before recovering, while Northrop Grumman dropped nearly two percent. Palantir took the hardest hit, closing down more than 10%.