The Trump administration is putting mounting pressure on Australia to drastically increase its defence spending, aligning with NATO’s new benchmark of 5% of GDP.
While NATO allies recently accepted this demand, Australia is resisting calls to push its military budget beyond its current trajectory of 2.3% of GDP—well short of the 3.5% target set by the United States for Indo-Pacific partners.
White House Press Secretary Karoline Leavitt made it clear: if European allies can meet the new requirements, Asia-Pacific partners—including Australia—should do the same. “If NATO can do it, so can Australia,” she stated.
Prime Minister Anthony Albanese pushed back on the demand, asserting that Australia’s defence investments reflect the democratic will of its people. “We brought our budget to an election and were overwhelmingly endorsed,” he said. “We are doing what is necessary to protect the national interest, including our defence.”
But President Donald Trump isn’t satisfied. He has already promised to “make Spain pay” for failing to meet spending expectations, threatening to double tariffs on Spanish goods. The same economic stick could be used against Australia if it doesn’t fall in line.
This comes at a delicate time. The AUKUS submarine deal is under review, and Albanese’s attempt to meet with Trump at the G7 summit was cancelled amid escalating Middle East tensions. Meanwhile, Foreign Minister Penny Wong is set to meet with Quad partners in Washington in an effort to shore up regional security cooperation.
The geopolitical stakes are high. With Trump escalating trade leverage to enforce defence compliance and framing Australia’s hesitancy as a lack of commitment, Albanese faces a difficult balancing act. Should he concede to US demands at the cost of domestic economic priorities—or risk diplomatic backlash that could strain trade ties and jeopardise defence partnerships?
For now, Australia stands firm. But with the Pentagon, the White House, and even US Secretary of State Marco Rubio echoing Trump’s hard line, the window for resistance is narrowing.
