Japan has warned defense contractors of deep cuts to expected orders as fiscal constraints threaten to scale back a military buildup that Prime Minister Sanae Takaichi’s government says is ?needed to counter China, four people familiar with the matter said.

Finance Ministry officials last week ?proposed spending between ??50 trillion ($313 billion) and ?60 trillion on defense over ?the five years starting in April 2027, the people familiar with the proposal said.

That would exceed the current ?43 trillion five-year plan but fall well short of the ?80 ?trillion advocated by some defense officials and ruling Liberal Democratic Party lawmakers.

The gap would leave Japan short ?of its target of raising defense outlays to 2% of gross domestic product (GDP), as U.S. President Donald Trump presses Washington’s allies to spend more ?on their militaries.

The 2026 U.S. National ?Defense Strategy calls for allies worldwide to spend 3.5% of GDP on their armed forces and a further 1.5% on broader security needs.

The revised ?spending proposal could mean ?cuts by as much as half in planned purchases of some ?missiles and aircraft, including U.S.-made F-35 stealth fighters, the people said.

The people spoke ?on condition of anonymity because they were not authorized to speak to the media.

“The advisory panel on security and defense has not yet discussed matters at that level of detail either, so I don’t think we are at a stage where I should comment,” Finance Minister Satsuki Katayama told reporters when asked about the revised spending proposal.

The Defense Ministry did not immediately respond to a request for comment.

Finance Ministry officials argue that a steeper increase would be difficult to fund alongside Takaichi’s commitments to invest in economic growth and cut the sales tax on food, which would squeeze ?government ?revenue, three of the sources said.

The sales tax cut would leave ?an annual ?4.3 trillion revenue shortfall that Takaichi would need to fill through other funding sources, ?potentially including foreign exchange reserves.

The Finance Ministry’s defense proposal, however, is likely to face resistance from security hawks in Takaichi’s party, setting up a clash over how much Japan can afford to spend to bolster its defenses.

“A contingency could occur at any time. If the goal ?is to build the capabilities necessary to deter and prevent such a contingency, a figure in the ?50 trillion range is out of the question,” one ruling party official familiar with the discussions said, requesting anonymity because of the sensitivity of the issue.