This graphic, via Visual Capitalist's Marcus Lu, breaks down the expected defense expenditures of NATO members in 2023, using data from NATO and based on current prices and exchange rates.

U.S. Dominance of NATO's Defense Spending

NATO defines defense expenditure as payments made by a national government, excluding regional, local, and municipal authorities, specifically to fulfill the requirements of its armed forces. It requires members to spend at least 2% of its GDP on defense.

A major component of defense expenditure includes payments for active armed forces personnel as well as retired pensioners. Expenditures for stockpiling war reserves of military equipment or supplies are also included. Additionally, it encompasses expenditures for peacekeeping and humanitarian operations, as well as the destruction of weapons.

The U.S. is by far the largest contributor to NATO's budget. In 2023, the country accounted for $860 billion spent by the organization, representing 68% of the total expenditure. This amount is over 10 times more than that of the second-placed country, Germany.

U.S. defense spending, within the context of NATO, aims to support European allies, deter adversaries like Russia, and gain access to additional military resources, among other objectives.

In 2018, then-President Trump sent letters to NATO allies demanding that they spend more on defense to meet the 2% minimum target. In recent years, however, the U.S. has increased its spending, experiencing a 6% jump compared to 2021.

The Future of NATO

After two years since Russia's full-scale invasion of Ukraine, NATO has mostly maintained its unity against Moscow.

The alliance has expanded with Finland's membership in 2023 and will likely include Sweden soon.