Trump wants a 5% Nato target – but defence spending is more complicated than he thinks

Of all the outlandish claims made by Donald Trump since winning the 2024 election, it is what he has said about Nato that could have the greatest consequences for America’s allies. 

During a press conference on Tuesday at his at Mar-a-Lago home, the president-elect said that all Nato allies should increase their defence spending to 5 per cent of GDP. The current target is 2 per cent, which not all allies meet. 

“I think Nato should have 5 per cent,” he said. “They can all afford it, but they should be at 5 per cent, not 2 per cent.”

In the press conference, during which Trump threatened Denmark, proposed that Canada become America’s 51st state, and said the US should take back the Panama Canal, it is reasonable that comments about the defence spending of allies get overlooked. But his rhetoric on Nato has historically caused allies to change policy, so his latest demands could have a real-world impact. 

Trump’s Nato spending claims – fact-checked

“Nobody knows more about Nato than I do”, claimed Trump, adding: “If it weren’t for me, Nato wouldn’t exist right now.” He went on to say: “I raised from countries that weren’t paying their bills, over $680bn (£580bn). I saved Nato, but Nato is taking advantage of us.”

It is true that after Trump criticised allies’ frugality, some raised their levels of defence spending. In 2014, only three met the 2 per cent target, compared with nine in 2020, the final year of his first term. That number has since jumped to 23 out of the now 32 members. However, the most dramatic increase in spending came in response to Russia’s full-scale invasion of Ukraine, not Trump’s demands. 

His claim that he “raised” over $680bn “from countries that weren’t paying their bills” is harder to verify. Nato does not have a big pot of money into which allies pay. The 2 per cent target is for domestic defence budgets and for allies to meet as they see fit. Of course, Nato HQ does make recommendations in the hope of co-ordination, but it does not dictate how they organise spending or policy.

A sudden spending rise could be a headache for Nato

Exactly what Trump expects to happen if all 32 allies increase their defence budgets to 5 per cent of GDP is also unclear. Nato officials would obviously be delighted if everyone announced that they were willing to spend more, but would doubtless have some questions, chiefly: what on earth will they spend all that cash on?

What Nato considers defence expenditure is somewhat liberal. Military and civilian pensions can be included, as can unsuccessful research and development projects. 

Critics of the current definition already accuse allies, including the UK, of padding their defence budget to meet the 2 per cent target. If that number jumps to 5 per cent, there is a risk allies scramble desperately to meet the demand. 

That could also be a strategic headache for the alliance. There are, bluntly, only so many tanks and fighter jets up for sale. Nato already has a problem of poor co-ordination among allies – duplicating kit procurement is a classic example of this. Efforts have been made recently to correct this by Nato HQ, but a sudden rush to splash the cash could do real damage to that work. 

As one Nato official said: “If it was 5 per cent tomorrow we’d flood the market without getting much back.”

Is Nato taking advantage of America?

Central to Trump’s anti-Nato rhetoric is the idea that the rest of the alliance, specifically Europeans, have underspent and assumed America will bail them out when push comes to shove. 

The numbers back Trump’s claims and European leaders know it. Nato’s own website says: “The combined wealth of the non-US Allies, measured in GDP, is almost equal to that of the United States. However, non-US Allies together spend less than half of what the United States spends on defence.” 

Nato’s Article 5, the principle that an attack on one is an attack on all, by definition means that European allies benefit disproportionally from American defence spending. This is why Trump’s latest comments must be taken seriously.

How seriously should we take Trump’s threats?

Trump might know that an increase of 5 per cent is not only difficult but largely pointless. Most European officials think his threats are the starting point for a negotiation. However, that does not mean Trump is not serious about pulling away from the alliance. 

We know that Trump does not want American troops in Europe. We know his base does not like the idea of fighting overseas. And America’s power within the alliance is so enormous that Trump could resist sending troops to Europe, even if an ally invoked Article 5 – which is more flexible in what it demands of allies than many assume. 

So, while his claims might be radical and far-fetched, they could have real consequences. And as ever with Trump, those consequences might well lead to international chaos.