The Problem With Trump Crackdown on Defense Dividends

At the ongoing World Economic Forum meetings, both U.S. foreign and domestic policies have taken center stage. This includes issues ranging from housing affordability to reshaping how the U.S. defense contractors run their businesses. In a recent Executive Order, the President, who is obviously not happy with the performance of America’s defense industrial base, forbid them to “pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget.”Secretary Scott Bessent has since doubled down on these restrictions by stating that “These defense contractors have let down the American people.” These restrictions are raising alarm bells, not only for the companies that are directly targeted, but also for other parts of the economy that may be impacted, directly or indirectly, by this order.