President Donald Trump prefaced his arrival to the annual summit meeting of the NATO military alliance in The Hague by telling reporters Tuesday morning, “NATO was broke, and I said, ‘You’re going to have to pay.’”
NATO members agreed on Sunday to hike their defense spending to 5% of their gross domestic product (GDP) by 2035, a marked increase from the 2% commitment that’s been standing since 2014. Trump previously demanded allies double their spending goals to 4% of GDP in 2018. Experts tell Fortune that while the effort to collectively pledge billions of additional dollars toward defense spending over the next decade will be met by some countries, it may not be feasible for others.
The pact details a pledge of 3.5% of GDP to be put toward “core” defense, with 1.5% of GDP funneled to security-related investment, “including in infrastructure and resilience,” according to NATO’s website. To put the percentages into perspective, NATO estimates the UK spent 2.33% of its GDP, or $82.1 billion USD, in 2024.
Experts say the Sunday agreement may be more of a political play than a promise, as European countries aim to appease Trump and reinforce the alliance amid geopolitical turmoil.
“Five percent would be just crazy for Europeans,” Liana Fix, a Council on Foreign Relations fellow for Europe, told Fortune. Though Fix says 3.5% of GDP is a realistic estimate for many member countries’ needs.
“Most European countries have not spent 5% (of GDP) in the Cold War,” Fix said. “That is obviously something which is not only difficult to communicate to European constituencies, but also something which can still lead to a contentious discussion with Donald Trump if he realizes 1.5% is actually not the kind of real defense spending that he demanded from the Europeans.”
Fix expects the leaders to detail more of what could fall under the additional 1.5% of GDP and define the “division between 3.5% and 1.5%” during the NATO summit, which she’s attending.
The agreement likely will not be upheld by all member countries, experts say.
“(The agreement) is not a one size fits all kind of thing,” Jan Techau, Europe Director at Eurasia Group, told Fortune. “In theory, it must be, because that’s the idea of the whole thing: an equal commitment by all. But in reality, that has never been the case.”
Fix said the 5% target was designed entirely to placate Trump, who posted a screenshot of a verified private message from NATO Secretary General Mark Rutte to Truth Social on Tuesday. “You will achieve something NO American president in decades could get done,” Rutte’s message, which was confirmed by NATO’s press office, said. “Europe is going to pay in a BIG way, as they should, and it will be your win.”
“Frankly (the NATO agreement is) a classical compromise, clearly crafted by the Secretary General Mark Rutte,” Bruegel Senior Fellow Jacob Funk Kirkegaard told Fortune. “He’s obviously a former long-standing European Head of State who understands how to play this game extremely well.”
Fix said NATO leaders hope Trump remains in a good mood throughout his visit.
“The idea for this summit is really to give Donald Trump a victory lap, to tell him, ‘You got us to this point. We are doing it.’ And to just avoid any contentious issue on the agenda,” Fix said.
En route to the summit, Trump questioned a core principle of the NATO alliance, refusing to commit to Article 5—the agreement of collective defense among member nations. When a reporter asked if he was committed to the clause, Trump responded: “Depends on your definition. There’s numerous definitions of Article Five. You know that, right?”
Article 5 stipulates that if a NATO ally is attacked, every other member state will “consider this act of violence as an armed attack against all members,” and will take actions to assist the country, according to NATO’s website.
While the unified front welcoming Trump to The Hague may prioritize maintaining the NATO alliance, 23 of the 32 member countries have reached the 2% of GDP spending threshold—and experts think some will reach 5% by or before 2035.
The U.S. defense funding was 2.7% in 2024, nearing a record low, according to the U.S. Department of Defense. NATO’s data records 2024 U.S. spending on defense just below 3.5%.
“The ripple effects for the U.S. economy is probably going to be negative,” Kirkegaard said of the NATO agreement, “The traditional significant U.S. arms exports to Europe will drop quite significantly as a result of this as Europe build(s) on its own military industrial capacity.”
Countries set on meeting the new target
Germany’s cabinet approved a draft budget for 2025 and budget framework for 2026 that details plans to reach 3.5% of GDP on core defense spending by 2029, six years before NATO’s 5% target.
“(Germany) want(s) to become the poster child of how Europe can increase its capabilities,” Techau of Eurasia Group, told Fortune.
Fix of CFR said the country is in a “really good position” to realize the plan, as it has low debt and can increase defense spending through loans and taking on more debt.
Poland’s defense spending was 4.2% in 2024 and is projected to rise to 4.7% in 2025, according to NATO.
Techau said countries closer to Russia like Poland, the Baltic states, and some of the Scandinavian countries are more committed to reach the target spending goal—Kirkegaard says this trend is unsurprising “given the acute military threat that Russia poses to Europe.”
Countries unlikely to reach the target
Spain pushed back on the deal. Prime Minister Pedro Sanchez saying Madrid would not have to meet the 5% target as it would only have to spend 2.1% of GDP to meet NATO’s core military requirements, Reuters reported on Sunday.
“They’re having a problem with Spain,” Trump said on Tuesday. “Always a problem with Spain. Spain’s not agreeing, which is very unfair to the rest of them.”
The UK Prime Minister Keir Starmer said the country must “actively prepare” for war, pledging to the spending target. Though the country would be “fiscally challenged” to reach this goal, Kirkegaard said.
“The fiscal challenges are probably most acute in the UK, France, and also in Italy, Spain,” Kirkegaard said.
Even so, European countries look to find solutions to a potential U.S. troop withdrawal from the region.
Kirkegaard said he “absolutely subscribe(s)” to European intelligence estimates that say if the Ukraine-Russia war ended tomorrow, Russia would begin preparing for a broader war against “one or more NATO members.”
“For Europe unable to defend itself against Russia today without either Ukraine or the United States, that’s a very unpleasant situation to be in,” he said.
This story was originally featured on Fortune.com
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