Trump says increased military spending to come from 'revved up economy'

US President Donald Trump has said that the $54bn planned increase in military spending in the country's budget will be generated by a "revved up economy".

In an early morning interview with Fox News on Tuesday, Trump was speaking ahead of a key address to Congress in the Capitol later in the day.

Trump was asked how such a large spending increase on the armed forces would be paid for, apart from the reworking of the likes of Obamacare.

"I think the money is going to come from a revved up economy," Trump told Fox. "I mean you look at the kind of numbers we're doing, we were probably GDP of a little more than 1 percent and if I can get that up to 3 or maybe more, we have a whole different ball game. It's a whole different ball game."

"We're going to spend a lot more money on military. We really have to, we have no choice," the President added. "We're going to upgrade our military very substantially."

Other than claims of enlarging the economy to generate the funds for the massive hike in spending, Trump did not give any more specific details of how this would be achieved.

Nonetheless, some analysts had speculated over previous sessions that Trump might be looking to use a so-called border adjustment tax to finance his plans for increased spending.

"It is highly speculative to come up with a clear picture for markets ahead of any detailed announcement and the market response may heavily depend on the question of border-adjustment taxes, which in our view would have negative consequences not just for the main US trading partners but for the US itself. In the end, it would not be surprising to see US yields moving slightly higher across the curve due to a revival of the reflation trade story," analysts at said UniCredit Research said in a note sent to clients earlier on Monday.

Of his administration's actions regarding immigration since he took over the Oval Office in January, Trump said that they were "getting the bad ones out".

"We're getting the bad ones out, the bad people, gang people, drug lords, in some cases, murderers," he said.

Trump has repeatedly praised the political coverage of Fox News, while chastising several other mainstream news outlets.

"I believe that sometimes they don't have sources," Trump said. "I believe that a lot of the sources are made up. I believe a lot of the sources are pure fiction. They just pull it out of thin air."