NATO released its annual defense spending estimates Thursday, showing member nations will reach a historic $1.404 trillion in defense expenditures for 2025, with 31 of the alliance’s 32 countries meeting the 2% GDP spending benchmark for the first time since its establishment in 2014.
The report, published by NATO headquarters, shows the United States leading spending at $845 billion, while European allies and Canada combined account for $559 billion. According to NATO figures, Iceland — which maintains no armed forces — is the sole member not meeting the target.
According to NATO’s official projections, Canada’s defense spending is expected to reach 2.01% of GDP in 2025, meeting the alliance target for the first time. This achievement follows Prime Minister Mark Carney’s commitment in June to accelerate Canada’s defense spending timeline to March 2026, moving up the previous 2032 deadline by six years.
NATO’s new spending targets became even more ambitious at the June summit in The Hague, where allies agreed to spend 5% of GDP on defense and security by 2035 — including 3.5% on core defense requirements and 1.5% on infrastructure and cyber capabilities.
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This increased military investment stems from heightened security concerns following Russia’s invasion of Ukraine. NATO Secretary-General Mark Rutte has characterized Russia as “the most significant and direct threat” to the alliance.
Poland leads NATO members in defense spending at 4.1% of GDP, followed by Estonia and the United States at 3.4% each. Countries bordering Russia have dramatically increased military budgets, with some Baltic states rising from less than 1% of GDP a decade ago to over 3% today.
For Canada, meeting these targets will require substantial changes to its defense procurement and military structure, experts say, moving from a military that “buys airplanes or ships every 30 or 40 years” to a more modern, continuously equipped force.
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