And Now Trump Is Taking Over Defense Contractors

By John R. Puri 

Thursday, January 08, 2026 

People say this administration is anti-trans, but the president himself is rapidly transitioning into a woman. Namely, Elizabeth Warren. 

First, he went after institutional investors buying up homes, a longtime bugaboo of the Massachusetts progressive. Warren was quick to take credit for Trump’s proposal to ban large landlords from the rental market, and she’s right to claim it. But, just like the president’s campaign pitch to exempt tips from income tax, mindless economic policies tend to jump the fine line between right-wing and left-wing populism. 

Now, Trump is embracing another of Warren’s favorite premises: that private companies that do business with the government should therefore be controlled by the government. If corporations depend on the government for revenue or assistance, she believes, public officials should be able to set the terms of their existence. With a federal bureaucracy as expansive and intrusive as ours, that means a lot of firms are eligible for manipulation. Under this formulation, contractors aren’t just service providers; they are the rightful domain of the state. 

The president is applying this progressive logic to defense companies. To cajole them into boosting production as he sees fit, Trump has issued an executive order barring military contractors from returning any money to shareholders through dividends or stock buybacks, “until such time as they are able to produce a superior product, on time and on budget.” Who will determine when that occurs? Trump, of course. In a separate social media post, he decreed that no defense contractor pay its executives more than $5 million per year. 

These moves are not without rationale. The “prime” defense contractors the military relies on for major systems benefit from an effective oligopoly, guarded by the Pentagon’s labyrinthine procurement processes. Their projects very often miss production deadlines and run over budget. And it’s true that contractors urgently need to expand their industrial capacity to produce needed munitions. None of this, however, authorizes the president to seize defense companies from their owners — most of whom are public shareholders — by commandeering their allocation of capital. Trump is making ex post facto orders of defense firms, not having his Defense Department engage in balanced negotiations. 

Practically speaking, barring investors from getting a return on their financial commitments is not a great way to encourage further investment in production facilities. Absent any time frame for contractors to once again return profits to shareholders, they might think they’re better off sitting on their cash and waiting out the administration than tying it up in new investments. 

A better way to disrupt the prime contractors and make them more dynamic is to open up military procurement to more competitors, which the Defense Department is already doing through internal acquisition reforms. If Raytheon isn’t making a particular missile cheaply enough or in sufficient quantities, invite other firms to bid on its contract. That sort of competition is what keeps businesses efficient throughout the private economy. 

To attract any bids for new weapons or munitions, however, companies will need to be confident that their shareholders will reap the profits once they materialize. Trump’s executive order is thus far more likely to freeze the existing defense market in place than shake it up. 

On principle, conservatives should reject the notion that a private entity’s dependence on government authorizes government to control it. That is a recipe for state domination of the private sector, as almost no industry is perfectly insulated from modern government’s reach. Unsympathetic defense contractors will hardly be the final victims of Trump’s inclination to bend American companies to his will.