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NATO defense spending hits Cold War highs after pressure from Trump and Russia's war in Ukraine, but experts say real military capability still lags.
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NATO leaders have agreed to move toward a new framework approaching 5% of GDP by 2035. For years, Trump accused NATO allies of relying too heavily on U.S. military protection while underinvesting in their own defense. His repeated threats to reconsider U.S. commitments to allies that failed to meet spending targets transformed what had once been an obscure alliance benchmark into one of NATO’s central political metrics.
"What really woke everyone up were two things," Jim Townsend, a former deputy assistant secretary of defense for Europe and NATO policy now at CNAS, told Fox News Digital. "One was the 2022 invasion by Putin … and the second was Trump, who came in and whether he scared them or he shamed them or whatever he did, that certainly added fuel to the fire as well.
" NATO leaders participate in a summit in The Hague, Netherlands, on June 25, 2025, where they pledged to increase defense spending to 5% of GDP by 2035 as requested by President Donald Trump. Poland now spends a larger share of its economy on defense than any other NATO member. Estonia, Latvia and Lithuania all have sharply increased military budgets since 2022.
Germany, long viewed as a symbol of Europe’s post-Cold War military decline, launched a major rearmament push and created a 100 billion euro special fund aimed at rebuilding the Bundeswehr. European allies and Canada increased defense spending by 20% in 2025 compared with the previous year, according to NATO’s latest annual report. The alliance says European members and Canada have added hundreds of billions of dollars in defense spending since 2014.
Across Europe, governments are buying tanks, air defenses, fighter jets and artillery systems while racing to replenish stockpiles depleted by the war in Ukraine.
"You have to start off with spending more, and you’re not going to see the capability results for a while," Townsend said. U.S. Army M1 Abrams tanks take part in the Armed Forces Day parade in Warsaw, Poland, on Aug. 15, 2025, commemorating Poland’s 1920 victory over the Soviet Red Army and marking the 105th anniversary of the Battle of Warsaw. A defense budget can show political commitment.
It does not show how many brigades are ready to deploy, how much ammunition is on hand, how quickly weapons can be produced or whether a country can sustain combat once a war begins. For years, the alliance measured burden-sharing largely through the 2% benchmark. It was simple, public and easy to compare. Countries that hit it could claim they were doing their part.
Countries that missed it became targets for U.S. criticism. A country can meet the benchmark while still lacking enough deployable forces. Another can announce a major weapons purchase that will not arrive for years. A third can spend heavily on personnel, pensions or infrastructure without immediately adding battlefield power.
NATO Secretary General Mark Rutte speaks as U.S. President Donald Trump listens during a bilateral meeting at the World Economic Forum Annual Meeting in Davos, Switzerland, Jan. 21, 2026.
"This is not just about more spending," NATO Secretary-General Mark Rutte said earlier in 2026, calling for"smarter investment in the right capabilities. " Rutte has also warned that rising defense budgets must be matched by expanded production capacity as the alliance scrambles to replenish stockpiles and prepare for long-term competition with Russia. Townsend said both Europe’s and America’s defense industries shrank after decades of lower military spending following the Cold War.
"The defense industrial capability in Europe and the United States has atrophied," he said. "They lost the scale to be able to surge a lot more production. " Now, he said, governments are running into the reality that factories cannot instantly produce the weapons NATO says it needs. "While the money is there and the orders are coming in, the producers are struggling to meet the requirements," Townsend said.
The war in Ukraine exposed how quickly modern industrial warfare can overwhelm peacetime production systems. European governments that announced major procurement plans after 2022 have frequently encountered long delivery timelines, strained supply chains and shortages in key sectors ranging from artillery ammunition to air defense interceptors. A recent McKinsey analysis warned that"structural constraints could slow the path from spending to military capabilities," pointing to fragmented procurement systems, industrial bottlenecks and long production timelines across Europe’s defense sector.
"Europe right now is dependent on the United States and U.S. industry to provide a lot of the capabilities they know they need," Townsend said. Among the most difficult capabilities for Europe to rebuild quickly, he said, are air defense systems, long-range strike weapons, logistics networks, intelligence capabilities and deep ammunition stockpiles.
"Air defense is what they need and they need long-range fires," Townsend said, pointing to systems such as Patriot missiles and High Mobility Artillery Rocket System launchers that European governments are scrambling to acquire. But as demand for those systems surged following Russia’s invasion of Ukraine, production timelines stretched longer. That already has pushed some NATO countries to look elsewhere. Poland, for example, turned to South Korea for major weapons purchases as governments searched for faster delivery timelines.
At the same time, European governments are trying to expand domestic production capacity to reduce dependence on U.S. suppliers. Germany has ramped up ammunition production, while some civilian industrial firms have begun shifting portions of their operations toward defense manufacturing.
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