US President-elect Donald Trump’s demand that NATO allies spend 5% of their annual gross domestic product (GDP) on defense shook up European capitals a fortnight before he returns to the White House.
“I think NATO should have 5%,” Trump said at a press conference on Tuesday. “They can all afford it.”
More than double current spending target
That is a whopping increase from the 2% pledge that NATO allies agreed on but which has proven difficult for several European nations. It’s also even higher than the 4% he called during his last term as president.
At a NATO summit in Washington last year, the military alliance revealed that at least two-thirds of its members spent 2% or more on defense this year, and only Poland crossed the 4% mark.
There has, however, been a quiet reckoning that European NATO members will have to reach deeper into their pockets to revive a sluggish defense industrial complex and counter a potential Russian threat. Still, several analysts told DW that increasing defense spending to 5% appeared impossible in the current economic environment, even for relatively wealthier nations.
Demand 5% but accept 3.5%?
An optimistic reading of Trump’s demand is that it is a negotiating tactic and that NATO, being an alliance of equals, will arrive at an amicable agreement, according to Rafael Loss, a policy fellow at the European Council on Foreign Relations (ECFR) who focuses on security and defense in the Euro-Atlantic area.
“I think increasing the defense spending to 3.5% may be seen as more realistic by Europeans,” he told DW from Berlin. “But the pessimistic scenario is that he is serious about pulling America out of NATO and encouraging Putin to do what he wants.”
Trump’s latest demand seemed “essentially an opening gambit,” and he may settle for less, said Ian Lesser, head of the German Marshall Fund’s Brussels office.
“But even 3% or 3.5% would be a stretch for many members,” Lesser said.
Don’t forget Russia, NATO head says
In December, NATO chief Mark Rutte reminded the European public of Russia’s defense investment of “7% to 8% of GDP” this year and said Europe needed to shift to “a wartime mindset” and”turbocharge” the continent’s defense production.
He appealed for countries to forgo part of their social welfare budgets and spend more on defense.
“On average, European countries easily spend up to a quarter of their national income on pensions, health and social security systems,” Rutte said. “We need a small fraction of that money to make our defenses much stronger, and to preserve our way of life.”
Where do major European NATO countries stand?
No NATO member currently spends 5% of GDP on defense, according to alliance figures. Poland is the highest spender at 4.12% of GDP, followed by Estonia (3.43%) and the United States (3.38%). Italy spent 1.49% of GDP on defense in 2024, which was likely a topic when Italian Prime Minister Giorgia Meloni met Trump at his Mar-a-Lago estate.
Despite the ideological kinship between Trump and Meloni, Italy will also be expected to increase its expenditure, according to Leo Goretti, head of the Italian foreign policy program at the Istituto Affari Internazionali, an Italian think tank.
“At best Meloni may extract some concessions — such as a delayed timeline for Italy to increase its defense spending,” he told DW from Rome, adding that Trump’s demand placed Meloni in a difficult position on the domestic front.
“Italy does want to spend more on defense, but the problem is that there is very limited fiscal space,” Goretti said. “The cost of welfare, especially health care and pension systems, doesn’t offer much leeway.”
The UK, among the strongest military members of the alliance, faces the same conundrum. While the country spent 2.33% on defense this year and has consistently been above the 2% mark, it hasn’t yet reached its self-set target of 2.5%.
Increasing it to 5% appears to be an especially tall order as the government has promised costly social improvements, including reduced in waiting time for doctors’ appointments and additional housing units.
France and Germany face a political upheaval over economic policies while Russia sympathetic far-right groups are on an ascent. France spent 2.06% on defense in 2024, and the current political turmoil has undermined the country’s defense plans.
Germany: Let defense needs, not GDP, determine spending
Germany, which faces snap elections next month, partly owing to economic and budget policy, spent 2.12% on defense. Any increase is certain to be a controversial proposition.
During his first term, Trump specifically called on Germany to increase defense expenditures. German Chancellor Olaf Scholz said the alliance had a “regulated procedure” to determine the military capabilities it needs, adding, “It is important that we stand together and act in unity on these questions.”
Scholz’s main challenger in upcoming German elections, opposition leader Friedrich Merz, called spending targets as a percent of GDP outdated.
“The 2%, 3% or 5% are basically irrelevant: What is crucial is that we do what is necessary to defend ourselves,” Merz told German public broadcaster Bayern 2 on Wednesday.
Higher defense expenditure to buy European or American?
Analysts said they believe long and tough negotiations between the incoming US administration and its European allies, but added that where more money is spent could bring about a compromise.
If Trump pushed them to go as high as 5%, they might decide to spend most of the cash on building the European defense industry rather than buying American. However, analysts said, a deal could be struck: Spend less than 5% of GDP but spend a bigger share on US manufacturers.
Edited by: Sean M. Sinico
