BY TYLER DURDEN
FRIDAY, JAN 09, 2026 – 12:25 PM
By Bas van Geffen, Senior Macro Strategist at Rabobank
President Trump has called for a 50% increase of the US defense budget, to $1.5 trillion by next year. This should suffice to build a “Dream Military.” The president argues this is required to keep the US safe and secure, but will it keep his own political position safe? Trump’s new military focus is creating more friction in Congress, as well as between the US and its allies.
Trump argued that tariff revenues can “easily” pay for a bigger defense budget, but the CBO has estimated that tariff revenues will only generate about half of the president’s planned increase in military expenditures. And that assumes these revenues will keep flowing. Trump could face a setback on that front as early as today (see below).
Even if tariff revenues keep coming in, Trump’s plans could renew concerns about the sustainability of the US’ finances. Cuts in other parts of government might be an option on paper, but Trump does need congressional support for this. And the House of Representatives has just passed legislation on a spending bill that waters down many of Trump’s budget cuts – including restoring Obamacare subsidies for three years – as lawmakers seek to avoid another shutdown by the end of the month.
Source:
https://www.zerohedge.com/markets/price-trumps-greenland-new-deal-100000-person