European defence stocks saw significant gains on Wednesday following comments made by US President-elect Donald Trump, in which he reiterated his calls for higher NATO spending and emphasized Greenland’s strategic importance. The rally came after Trump’s remarks during a press conference at his Mar-a-Lago residence on Tuesday, sparking speculation that his stance could pressure European nations to significantly increase their defence budgets.
Shares of key European defence companies surged during midday trading. Leonardo SpA rose by 4.8%, Rheinmetall AG jumped 6.1%, SAAB AB gained 3.8%, and Kongsberg Gruppen ASA climbed 2.9%. Investors responded positively to Trump’s comments, which were seen as a renewed push for Europe to shoulder a larger portion of NATO’s financial burden.
Trump Calls for Increased NATO Spending
In his press conference, Trump doubled down on his long-standing criticism of NATO allies for not contributing enough to the alliance’s financial needs. He reiterated that NATO’s current spending target of 2% of GDP was insufficient, suggesting that the benchmark should be raised to 5% to ensure better military readiness and fairer financial contributions among member states. “At that point, it was 2%, it should be 5%… not 2%,” Trump said, underscoring the need for a higher investment in military readiness across the alliance.
Trump also reflected on his previous efforts to secure increased NATO funding, claiming credit for raising over $680 billion by threatening to withhold protection unless NATO members met their financial obligations. “As soon as I said that, the money came pouring in,” he stated.
NATO Members Meet Defence Spending Goals
According to NATO’s latest report, 2024 marked a record year for military spending compliance, with 23 out of 31 NATO members meeting the 2% GDP target. Poland led the European bloc with military expenditures at 4.1% of GDP, followed by Estonia at 3.4% and Latvia at 3.1%. However, some countries, including Italy, Portugal, Spain, and Belgium, remain below the target.
Despite the progress, only Belgium failed to meet NATO’s equipment spending guideline, which requires members to allocate at least 20% of their defence budgets toward equipment.
Greenland’s Strategic Importance
In his remarks, Trump also drew attention to Greenland’s significance for US national security, citing rising Russian and Chinese military activity in the Arctic. “We need Greenland for national security purposes,” he declared, suggesting that Denmark should relinquish its sovereignty over the territory if negotiations over its status stalled. While Trump did not present specific proposals, he hinted at the possibility of imposing tariffs on Denmark if the issue remained unresolved. In response, Denmark reaffirmed its sovereignty over Greenland, with King Frederik updating the royal coat of arms to prominently feature the territory.
Trump’s Criticism of the Russia-Ukraine Conflict
Trump also commented on the ongoing Russia-Ukraine war, blaming its escalation on the Biden administration’s handling of the situation. “Russia would have never, ever gone in,” he said, calling the conflict “a disaster” and expressing concern over the immense human toll. He also criticized Europe’s financial contribution to Ukraine, asserting that the United States had provided a far larger share of the funding.
As the war continues, Trump’s remarks signal his intention to push for a reassessment of Europe’s role in global defence and security alliances, particularly in terms of financial contributions.
