NATO allies are spending more on defense than at any point since the Cold War, and NATO leaders have agreed to move toward a new framework approaching 5% of GDP by 2035, as governments across Europe and Canada pour hundreds of billions of dollars into tanks, air defenses, fighter jets and artillery systems.
Who Pays for the Rearmament
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.
For ordinary people, that means the priorities of the powerful are being written into budgets, procurement plans and industrial contracts. The money is there, the orders are coming in, and the military apparatus is expanding. But the article makes clear that the surge is not just about numbers on a ledger. It is about states trying to rebuild the machinery of war after years of underinvestment and after the fifth year of conflict in Ukraine exposed how quickly modern combat can burn through ammunition, strain production lines and overwhelm peacetime defense industries.
Jim Townsend, a former deputy assistant secretary of defense for Europe and NATO policy now at CNAS, said, "What really woke everyone up were two things," adding, "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." His comment captures the logic of the alliance: fear, pressure and militarized competition are what move governments, not the needs of the people who will live with the consequences.
The Benchmark Becomes the Boss
For years, Trump accused NATO allies of relying too heavily on U.S. military protection while underinvesting in their own defense, and 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. The old 2% benchmark 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.
Now NATO leaders are moving toward a new framework approaching 5% of GDP by 2035. That is the latest version of the same hierarchy: a transnational military bloc setting the terms, and member governments scrambling to comply. Poland now spends a larger share of its economy on defense than any other NATO member. Estonia, Latvia and Lithuania have all 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.
Even NATO leaders increasingly acknowledge that spending alone does not magically produce battlefield power. NATO Secretary-General Mark Rutte said earlier in 2026, "This is not just about more spending," calling for "smarter investment in the right capabilities." That is the language of managed escalation: more money, more production, more stockpiles, more readiness, all under the same command structures.
What the Industrial Machine Can’t Deliver Fast Enough
Townsend said, "You have to start off with spending more, and you’re not going to see the capability results for a while." Ukraine exposed how quickly a major war can drain ammunition stockpiles, strain production lines and overwhelm peacetime defense industries. A defense budget can show political commitment, but 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. That is the gap now facing NATO.
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." He said governments are running into the reality that factories cannot instantly produce the weapons NATO says it needs, and that while the money is there and the orders are coming in, the producers are struggling to meet the requirements.
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. Those delays have also highlighted how heavily Europe still depends on American military technology and production capacity.
Townsend said, "Europe right now is dependent on the United States and U.S. industry to provide a lot of the capabilities they know they need." 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.
As demand for those systems surged following Russia’s invasion of Ukraine, production timelines stretched longer. Poland, for example, turned to South Korea for major weapons purchases as governments searched for faster delivery timelines. Germany has ramped up ammunition production, while some civilian industrial firms have begun shifting portions of their operations toward defense manufacturing. Townsend said rebuilding Europe’s military capacity will take years and asked, "Will the Russians take advantage of this gap?"