According to the report, only the U.S., the UK, Estonia, Greece and Poland were the five nations of the 28-member bloc that met the 2% target. And Washington, with an annual military budget of almost $600 billion, still accounted for close to 70 percent of combined alliance defense spending a year ago. European allies and Canada spent nearly $10 billion dollars more on defense a year ago than in 2015, according to the report.
Jens Stoltenberg, the head of North Atlantic Treaty Organisation, said yesterday that more needed to be done to ensure that the burden of defence spending was shared equally between all 28 member states.
"All allies should reach this goal".
The decision by Britain, a leading military power in the continent, to leave the European Union has also galvanized the Europeans to do more on defense on their own.
Only four European NATO members - Estonia, Greece, Poland and Britain - met the two-percent standard a year ago.
Mr. Stoltenberg said Monday, "Germany won't reach 2 percent within a few years, it will take some time".
Trump has since reaffirmed support for the security alliance but insisted Europeans must "pay their fair share". His aides have said Trump wants to see progress on that by the end of this year and that Washington could otherwise "moderate" its support.
If Germany met the figure, for example, it would be spending on defense more than Russian Federation does, and it is unlikely that its armed forces could efficiently absorb the extra money anyway.
"When you are reducing spending at times of easing tensions, we have to be able to increase spending when tensions are increasing", Stoltenberg added.
"We have tripled the size of the Nato Response Force to 40,000; established a 5,000 strong Very High Readiness Joint Task Force, ready to move within days; and set up eight small headquarters in the eastern part of our Alliance". That compares to 1.47 percent for NATO's European allies last year and 1.44 percent the year before.
Europe's low expenditure has always been a sore point for the United States, which provides the lion's share of the alliance funds. Stoltenberg also raised the issue of "fair burden sharing" within the alliance in the report, noting that 23 alliance members "increased spending in real terms in 2016" and 10 members met the Nato-agreed guideline of spending 20% or more of their defence expenditure on major equipment.