The seeming policy change stems from a post on Truth Social, where President Trump called for increasing the defense budget to $1.5 trillion, a significant jump from the $1 trillion level he had previously signaled he would propose. While the administration argues that aggressive trade policies will offset these costs, budget analysts suggest the math does not add up—or piles even more onto the large and growing $38 trillion national debt.

Tariffs falling short of spending targets

President Trump has justified the proposed expenditure by pointing to the “tremendous numbers being produced by Tariffs.” He has asserted that these funds would be sufficient to finance the expansion toward a “Dream Military,” still reduce the federal deficit, and even “pay a substantial dividend to moderate income Patriots within our Country!” Here, he seemed to refer to his $2,000-per-person tariff dividend idea, which has failed to gain traction in Congress. In a November 2025 analysis, the CRFB found that it alone would cost twice as much as the tariff revenue coming in at that point.

The CRFB’s preliminary estimates of the increased military budget paint a starkly different fiscal picture than what Trump promises. The nonpartisan budget watchdog projects that the proposed hike would increase defense spending by $5 trillion through 2035. Even when accounting for tariff income, the spending increase is projected to be “far larger” and “about twice as large as expected tariff revenue.”

The CRFB cites recent projections from the Congressional Budget Office (CBO) that current tariffs will raise approximately $2.5 trillion through 2035, or roughly $3 trillion when interest savings are included. This leaves a multitrillion-dollar gap between the revenue the President is banking on and the price tag of his military ambitions.

Another budget watchdog, the Peter G. Peterson Foundation, had previously calculated that the U.S. government spends more on defense than the next nine countries combined. Based on the most current available data, the foundation said in a statement to Fortune that this new suggestion would dramatically increase that gap. Viewed from the top down, the foundation said, a $1.5 trillion U.S. military budget would exceed the combined military expenditures of the next 35 highest-spending countries. And starting from the bottom up, a $1.5 trillion U.S. military budget would exceed the military expenditures of every other nation combined except for China.

Legal challenges looming

The financial outlook could darken further depending on the judicial branch. The Supreme Court is expected to rule soon on the legality of tariffs implemented under the International Emergency Economic Powers Act (IEEPA).

If the Court strikes down these specific tariffs, the CRFB estimates that total deficit reduction from tariff revenue would plummet to roughly $700 billion through 2035 on a conventional basis. Under that scenario, tariff revenues would cover only about 15% of the proposed defense hike, drastically widening the deficit.

Legislative context and fiscal responsibility

The push for a $1.5 trillion budget comes on the heels of the “One Big Beautiful Bill Act” (OBBBA), passed in 2025, which already appropriated $175 billion to the defense budget. Given this recent injection of funds, the CRFB argues there is “little case for a near-term increase in military spending.”

Fiscal advocates are urging lawmakers to exercise caution. The CRFB suggests that, given the nation’s “high and rising national debt,” any future spending increases should be fully paid for—ideally “twice over”—through new revenue streams or spending cuts elsewhere. They warn that policymakers cannot rely on existing tariff revenue, noting that without those funds, deficits would already be much higher than current baselines.