Budget tightening is rumored to affect military expansion. Japan warns arms suppliers that they may drastically cut orders

Four people familiar with the matter told Reuters that Japan has warned domestic defense contractors that expected future orders may be significantly reduced. Due to financial constraints, Japan's original military expansion plans may be scaled back.

According to a Reuters report, people familiar with the matter said that Japanese Ministry of Finance officials proposed last week that defense spending should be controlled between 50 trillion yen (approximately NT$10.2 trillion) and 60 trillion yen (approximately NT$12.3 trillion) during the five-year period starting in April 2027. This amount will be higher than Japan's currently planned five-year defense budget of 43 trillion yen (approximately NT$8.8 trillion), but is still far lower than the 80 trillion yen (approximately NT$16.4 trillion) advocated by some defense officials and members of Congress from the ruling Liberal Democratic Party.

People familiar with the matter pointed out that Finance Ministry officials believe that if defense spending is further increased significantly, it will be difficult to simultaneously fulfill other commitments made by Prime Minister Takaichi Sanae, including investing in economic growth and reducing food consumption taxes. According to Reuters estimates, this budget gap will make it difficult for Japan to achieve its goal of increasing defense spending to 2% of gross domestic product (GDP).

U.S. President Trump is continuing to pressure U.S. allies to increase military spending. The United States' 2026 National Defense Strategy requires global allies to spend 3.5% of GDP on military power and an additional 1.5% on broader security needs.

People familiar with the matter claim that Japan's revised defense spending proposal may lead to cutting some missile and military aircraft procurement plans by as much as half, including the US-made F-35 stealth fighter jets. The people spoke on condition of anonymity because they were not authorized to speak to the media.

When Japanese Finance Minister Satsuki Katayama was asked by the media about the revised defense spending proposal, he said, "The security and defense-related advisory group has not even discussed it at such a detailed level yet, so I think it is not the right stage for me to comment yet." In addition, the Japanese Ministry of Defense did not respond to the media's request for comment.