The Nato summit in The Hague concluded with a sweeping shift in its defence posture: a new target for member countries to spend 5 per cent of their gross domestic product (GDP) on defence by 2035.
Billed as a “historic” and “transformational” moment by some leaders, the announcement was positioned as a bold response to mounting global threats, particularly from Russia.
But while most Nato members agreed to the goal, one country — Spain — publicly refused to endorse the spending benchmark, citing economic and political concerns. The move sparked strong criticism from US President Donald Trump.
What the 5% Nato target entails
The new defence spending goal significantly overhauls Nato’s financial commitments. Until now, the alliance had set a benchmark of 2 per cent of GDP for defence spending — a target many members struggled to meet.
But with the war in Ukraine ongoing and Russia continuing to be perceived as a long-term threat to Euro-Atlantic security, Nato members are now aiming to more than double that figure over the next decade.
According to the declaration adopted by the 32-member bloc, the 5 per cent spending target consists of two key components.
First, at least 3.5 per cent of GDP is to be dedicated to core military requirements — encompassing troop readiness, equipment procurement, operational deployments and enhanced capability development.
Second, an additional 1.5 per cent is to be spent on infrastructure upgrades such as ports, roads, bridges and airfields that facilitate military logistics, as well as cyber defences, innovation in the defence industrial base and national resilience initiatives.
For the first time, spending on weapons and ammunition provided to Ukraine will count toward the target, easing the transition for countries already contributing significantly to Kyiv’s war effort.
The implementation of the goal is scheduled to be gradual. Allies are expected to submit annual plans detailing a realistic and incremental path t
o meeting the 5 per cent mark by 2035.
These plans will be evaluated, with a major collective review of progress scheduled for 2029 — a year after the next US presidential election.
Nato leadership has underlined that the target reflects a recognition of the “persistent threat” posed by terrorism as well, and the need for sustained preparedness across the board.
Why Spain refused to meet Nato defence spending target
Spain stood out as the only Nato member
to explicitly reject the 5 per cent target.
Prime Minister Pedro Sánchez said that Madrid would not increase defence expenditure beyond 2.1 per cent of GDP, calling that level “sufficient, realistic and compatible with the welfare state.”
Speaking ahead of the summit, Sánchez argued that surpassing this level would require unacceptable sacrifices to other national priorities such as public welfare, environmental sustainability, and international development commitments.
In a letter published by El País, Sánchez elaborated that meeting the 5 per cent target would force the Spanish government to increase taxes on the middle class, reduce spending on green transition initiatives and curtail its foreign aid obligations.
He also warned that it would necessitate immediate off-the-shelf purchases from foreign suppliers, undermining Spain’s domestic defence industry and its goal of fostering indigenous military capabilities.
“It is the legitimate right of every government to decide whether or not they are willing to make those sacrifices,” Sánchez wrote.
Spain’s governing Socialist Party is in coalition with the left-wing Sumar alliance, which has publicly opposed higher defence spending.
According to Politico, members of the coalition were expected to attend a counter-summit advocating for peace, which was organised in parallel with the Nato meeting.
Despite its refusal to adopt the new spending target, Spain has reiterated its commitment to the alliance’s broader strategic objectives. Sánchez stated that Spain would fully meet Nato’s capability targets, which include specific military performance and readiness benchmarks agreed upon among allies.
Echoing this position, Spanish Economy Minister Carlos Cuerpo said in a Bloomberg TV interview: “Spain will be a responsible ally.”
He added, “No repercussions should derive from making good on our commitments and from being a reliable Nato ally, covering for the capabilities that we did commit to and that are necessary to defend Nato from the different threats that have been identified by experts.”
How Trump responded to Spain’s stance
Trump claimed credit for securing the broader Nato agreement and used the opportunity to publicly shame Madrid for its dissent.
Speaking at a press conference at the summit, Trump said: “I think Spain is terrible, what they’ve done,” and accused the country of attempting to “get a little bit of a free ride.”
US President Donald Trump speaks during a press conference, at the Nato summit in The Hague, Netherlands, June 25, 2025. File Image/Reuters
The US president went further, threatening to impose retaliatory measures through trade negotiations. “We’re negotiating with Spain on a trade deal. We’re going to make them pay twice as much — and I’m actually serious about that,” Trump said.
“You’re the only country that is not paying. I don’t know what the problem is.”
Trump continued: “You know they are doing very well. The economy is [doing] very well. And that economy could be blown right out of the water with something bad happening.”
He added, “They want a little bit of a free ride, but they will have to pay it back to us on trade because I am not going to let that happen. It’s unfair.”
However, there is a significant obstacle to Trump’s threat: as a member of the European Union, Spain does not negotiate trade deals independently. The European Commission represents all 27 EU countries in trade talks with the United States.
Unless Trump is able to insert specific language targeting Spain into a broader EU-level agreement, any punitive trade measures aimed solely at Spain may be difficult to implement.
Nonetheless, Trump has previously floated the idea of a blanket 50 per cent tariff on EU goods and signalled last month that such a move was under serious consideration.
While that proposal was paused until July 9, the US-EU trade negotiations remain tense — and Spain’s position on Nato spending could become a flashpoint.
Will countries be able to meet the new Nato defence target?
While Spain’s outright refusal stands out, it is not the only Nato country facing difficulty in meeting the new target. Belgium, France, Italy and Slovakia are expected to struggle to comply due to economic constraints.
In several of these nations, sluggish GDP growth, high debt levels, and political resistance to military expansion make the 5 per cent target a steep climb.
At the same time, proponents of the new benchmark — including Finland’s President Alexander Stubb — have welcomed it as necessary and overdue.
“We’re witnessing the birth of a new Nato,” Stubb said, praising the plan to return defence expenditure “back to the defence expenditure levels of the Cold War.”
For the United States, the announcement is being
heralded by the Trump administration as a personal victory.
Trump, who has frequently criticised Nato allies for not contributing enough to collective defence, used the summit to underscore his leadership.
“I came here because it was something I’m supposed to be doing, but I left here a little bit different,” he said. “The love and the passion” shown by Nato members “was unbelievable… They want to protect their country, and they need the United States.”
Trump also revisited comments he made during the 2024 campaign, where he warned that if a Nato country failed to meet its defence obligations, he would “encourage” Russia “to do whatever the hell they want.”
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Nato Secretary-General Mark Rutte is believed to have brokered a compromise with Spain to ensure the summit proceeded smoothly.
Though he disagreed with Spain’s interpretation of its obligations, Rutte is reported to have accepted that Madrid’s continued contribution to Nato’s operational capabilities fulfills the alliance’s immediate needs — even if it falls short of the new financial benchmark.
With inputs from agencies