ROME — Donald Trump’s demand that European states spend 5% of GDP on defense could spur arms shopping in Europe to the detriment of U.S. companies, analysts have told Defense News.
The U.S. president’s insistence that Europe is underpaying for U.S. protection is likely to come up next week during the first visit to the continent by his new defense secretary, Pete Hegseth.
Pushing up defense spending to 5% of GDP will be an impossible task across NATO as a whole, with around eight of 32 members yet to achieve the alliance’s current 2% target.
Analysts told Defense News NATO members are instead likely to discuss a new target of 3% when they meet in The Hague in June – a compromise aimed at keeping Trump at bay.
On paper, that is good news for American firms since around 60 percent of European defense orders are placed in the United States. Hopes in Europe of more orders being placed in the EU after the start of the Ukraine war were dashed when states found the quick purchases they needed were available only across the Atlantic, starting with F-35s.
“The subtext of Trump’s demands for more spending is that purchases will be made in the U.S. to help his re-industrialization plan,” said Lucio Caracciolo, the editor of Italian geopolitics publication Limes.
“Poland’s leap in spending is based on U.S. weaponry,” he added.
Furthermore, some states falling short of spending targets may seek to appease the Trump administration by agreeing to do more shopping in the U.S.
But Yohann Michel, an analyst with the French IESD think tank, said there would be a need for more purchasing at home. “When everyone is buying the same thing at the same time, prices go up. The answer is wiser spending which means cooperation and joint purchasing,” he said.
The likely consequence? More spending in Europe and less in the U.S., he said. “That will require more investment in European industry, which is not something Trump had in mind,” he added.
NATO chief Mark Rutte urged European members to do more joint purchasing during a Jan. 13 speech to the European parliament.
He claimed EU states would risk needing to push spending up to 3.7% of GDP to hit capability targets if they did not enter more joint programs to make spending go further.
That is music to the ears of the European Union, which is currently hard at work boosting ways for member states to club together to invest in European programs.
“The trend is for increased spending and there is a new energy in collaborative programs in Europe,” said an EU official, who declined to be named because he was not authorized to speak on the record.
Analysts said that Trump’s aggressive approach to European states was also set to have another consequence: seriously weakening the trans-Atlantic alliance.
“Europe hears what Trump says, it tries not to overreact, it buys time to see what the negotiation is actually about – after all not even the U.S. is spending five percent,” said Michel. “But many are afraid he is asking for the impossible as he seeks excuses to no longer protect Europe,” he added.
Christian Mölling, director of the Europe Program at the Bertelsmann Foundation Germany, recalled how Trump threatened to stop defending Europe during his first term as president.
“Deterrence is a mind game. You need to give the impression you would use nuclear weapons and lead your allies into a war with Russia. But what if there is a question mark over that? Once the genie is out of the bottle it never goes back in,” he said.
“There is also a rationale for cheating. In a moment of truth, would the U.S. leave us even if we’ve paid the money?” he added.
Michel said that Europe might decide to spend more on defense not in the hope that Trump will continue to promise protection, but because it believes Trump will renege on that promise.
“Europe may get to 3-4 percent of GDP because it estimates it cannot rely on Article 5 of NATO. It may spend more – not because it wants to be friends with Trump but because it assumes it will be alone,” he said.
“What happens if the US does not allow Europe to use its F-35s against Russia to defend Poland or Latvia? The example has already been established by how the use of Starlink in Ukraine was controlled,” he said.
“And to give an even more outlandish example: What if Denmark needs its F-35s to defend Greenland against the U.S.?” he said.
Tom Kington is the Italy correspondent for Defense News.
