European defence stocks rallied on Wednesday after President-elect Donald Trump reaffirmed his stance on increasing NATO spending and highlighted Greenland’s strategic importance during a press conference at Mar-a-Lago on Tuesday.
Shares in Leonardo SpA rose 4.8%, Rheinmetall AG jumped 6.1%, SAAB AB rose 3.8% Kongsberg Gruppen ASA gained 2.9% during midday trading in Europe, as markets reacted to speculation that Trump’s comments could pressure European nations to ramp up defence budgets significantly.
Trump puts NATO spending under scrutiny
Trump doubled down on his long-standing criticism of NATO allies for not contributing sufficiently to the alliance.
He reiterated that NATO’s current 2% of GDP spending benchmark is insufficient, suggesting that the target should be much higher. Trump argued that a higher percentage would ensure better military readiness and a fairer distribution of financial responsibility among NATO allies.
“At that point, it was 2%, it should be 5%… not 2%”, he said, underlining the need for greater military readiness and equitable financial contributions among member states.
During the press conference, Trump also recounted his earlier efforts to secure increased NATO funding.
“I raised over $680bn (€652bn) by saying if you don’t pay, we’re not going to protect you. And as soon as I said that, the money came pouring in,” he said.
NATO members paid up in 2024
According to NATO’s latest report, 2024 marked a record year for military spending compliance, with 23 of the alliance’s 31 members meeting the 2% of gross domestic product (GDP) target.
Poland led the Europe’s bloc with military expenditures at 4.1% of GDP, while Estonia and Latvia followed at 3.4% and 3.1%, respectively.
However, some nations, including Italy, Portugal, Spain, Slovenia, Croatia and Belgium, remain below the 2% benchmark.
Except for Belgium, all NATO members allocated at least 20% of their defence budgets to equipment, meeting alliance guidelines.
Greenland: A “national security” priority
Shifting his focus to Greenland, Trump underscored its importance to US national security, citing increased Russian and Chinese military activity in the Arctic.
“We need Greenland for national security purposes”, he said. “If [Denmark] does [have legal rights], they should give it up, because we need it for national security.”
Although no specific proposals were unveiled, Trump floated the possibility of imposing steep tariffs on Denmark should negotiations over Greenland’s status reach an impasse.
Denmark responded symbolically to the remarks, with King Frederik updating the royal coat of arms to prominently feature Greenland, reaffirming the kingdom’s sovereignty over the territory.
Trump on the Russia-Ukraine Conflict
Trump also addressed 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 lamenting its devastating human toll.
“The number of people being killed in that war – people don’t know, mostly soldiers now – but the towns have been obliterated”, he said.
“This was a Biden fiasco”, he added, asserting that the conflict could have been avoided under different leadership.
Looking ahead, Trump acknowledged that resolving the war has become significantly more challenging due to the scale of destruction. “It’s a much tougher [situation] than it would have been before it started”, he said.
Trump also criticised Europe’s limited financial contribution to Ukraine compared to that of the United States.
“I said it to President Zelenskyy, Europe is in for a tiny fraction of the money that we’re in. Now, whether you like that situation or not, Europe is much more affected than the United States.”
As the conflict continues, Trump’s remarks signal his intent to push for a reassessment of Europe’s financial role in global defence and security alliances.