US President Trump targets large defence firms with executive order

A US Air Force F-35A Lightning II fighter. Lockheed Martin reported a record production of 191 F-35s in 2025. (US Air Force/Staff Sgt Zade Vadnais)

US President Donald Trump issued an executive order on 7 January intended to incentivise defence companies to focus on contract performance.

“After years of misplaced priorities, traditional defence contractors have been incentivised to prioritise investor returns over the nation's warfighters,” the order stated.

While some companies have invested in increased production capacity, “far more have not”, the order said, charging that some are pursuing newer, more lucrative opportunities while underperforming on existing contracts.

It also said some firms are conducting “stock buybacks and issuing excessive dividends to shareholders at the cost of production capacity, innovation, and on-time delivery”.

Accordingly, the order seeks to bar companies from paying dividends or buying back stocks until they can “produce a superior product, on time, and on budget”.

Targeting underperformance

Within 30 days of the order and on a continuing basis thereafter, the secretary of defence will identify defence companies that are underperforming on contracts, not investing their capital into needed production capacity, insufficiently prioritising US government contracts, and not producing quickly enough, as determined by the secretary, as well as those companies that have engaged in stock buybacks or corporate distribution while underperforming, according to the order.

Underperforming contractors will receive a notice from the secretary of defence outlining shortcomings and providing an opportunity to submit a remediation plan during the 15 days following notification, according to the order.