NATO Sets Historic 5% GDP Defence Spending Goal by 2035 Under Trump Pressure at 2025 Summit

At the NATO Summit held on June 25, 2025, in Washington, D.C., alliance members agreed to a historic shift in their collective defence posture—raising the long-standing defence spending benchmark from 2% of national GDP to an ambitious 5% by 2035. The move, unprecedented in NATO’s 75-year history, comes amid intensifying geopolitical threats and under heavy pressure from U.S. President Donald Trump, who returned to office in 2025 with a renewed focus on strengthening NATO’s military muscle.

This significant leap in defence investment is not just a numerical increase—it reflects a broader recalibration of NATO’s purpose in the face of Russia’s continued aggression in Ukraine, rising tensions with China, hybrid warfare, and cyber threats across Europe.

The Breakdown of the 5% Target

The new benchmark is split into two major categories:

• 3.5% of GDP will be allocated for core defence spending, including military personnel, weapons procurement, modernization of equipment, training, and operational readiness.

• 1.5% of GDP will be directed towards allied security-related investments, such as cyber defence, intelligence capabilities, critical infrastructure resilience (e.g., energy grids and communication networks), and logistical infrastructure vital for rapid military deployments across Europe.

This dual-focus spending plan marks the first time NATO has differentiated between hard military capabilities and broader national security resilience within its official budget targets.

Trump’s Push and the American Leverage

President Donald Trump, long a critic of NATO’s financial burden-sharing, made increasing European defence contributions a central pillar of his second-term foreign policy. At the summit, Trump reportedly issued stern warnings to allies—particularly Germany, France, and other Western European powers—that the U.S. would reconsider its security guarantees under Article 5 unless member states committed to higher defence budgets.

According to officials present at the summit, Trump emphasized the growing gap between U.S. defence contributions (historically above 3.5% of GDP) and those of most European allies, many of whom have struggled to meet even the existing 2% threshold.

A joint declaration released after the summit read:
"We reaffirm our unwavering commitment to collective defence and recognize that modern threats demand modern investments. We commit to reaching the new NATO defence investment target of 5% of GDP by 2035."

Implications for NATO’s Core Objectives

NATO’s primary objective remains collective defence under Article 5 of its founding treaty. However, the new spending target reflects a recognition that the nature of warfare has fundamentally changed. NATO is increasingly preparing for:

• Conventional military threats, particularly in Eastern Europe where Russia remains a direct and persistent challenge.

• Cyber and hybrid warfare, including state-sponsored disinformation, attacks on civilian infrastructure, and election interference.

• Strategic competition with China, which has gained traction as an emerging priority for NATO's global posture.

The increased financial commitment is intended to close the readiness gap, replenish depleted arsenals following aid to Ukraine, and reinforce Europe’s eastern flank with more permanent deployments, forward logistics bases, and air and missile defence systems.

Challenges

While the 5% goal sends a strong message of resolve, its implementation will face hurdles:

• Economic strain: European economies—especially smaller or struggling ones—may find it difficult to ramp up defence spending without domestic backlash. Balancing social spending and defence will be politically sensitive.

• Public opinion: In several NATO countries, defence spending has traditionally taken a backseat to welfare and healthcare. Convincing voters to prioritize defence in peacetime will be a challenge.

• Defence industry capacity: Scaling up to absorb such massive investments will require significant expansion in defence manufacturing, supply chains, and skilled labour across NATO nations.

Despite these obstacles, analysts say the new target is likely to act as a long-term stimulus for Europe’s defence industry and will deepen U.S.-Europe defence industrial cooperation. NATO officials noted that clearer annual benchmarks and transparency will be established to monitor compliance—a lesson learned from years of lagging progress under the previous 2% goal.

A New Era for NATO

The 2025 NATO Summit may be remembered as the beginning of a bold new era. With the alliance’s defence posture now formally tied to a far more substantial financial commitment, NATO aims to present a more united, capable, and forward-looking military front.

As threats multiply and great-power rivalry returns to the forefront of global politics, NATO’s bet is clear: deterrence requires not just words, but real, sustained investment.