A few days back, President Donald Trump issued a warning to Spain, threatening new tariffs unless the country raised its defense spending to 5% of its GDP. It’s hard to tell if this approach will work, but one thing seems clear: Trump appears poised to be even more effective than during his first term in ensuring that other nations keep their commitments—especially regarding defense spending.
Back in 2006, NATO allies collectively agreed to allocate 2% of their GDP towards defense. There was minimal progress for years until the Obama administration struck a renewed agreement in 2014, which aimed for all member countries to meet this target by 2024. However, when Trump assumed office in 2017, only five out of 28 countries had met this benchmark.
At that time, the president and his team urged allies to step up. By 2021, the number of NATO members reaching the 2% target doubled, with significant increases in military expenditure among allies.
Fast forward to 2025, bolstered by the ongoing conflict in Ukraine and the anxiety surrounding Vladimir Putin, Trump has reportedly succeeded in persuading NATO allies to allocate a stunning 5% of their GDP to defense.
On the trade front, the White House has also employed tariffs and other strategies to encourage other nations to honor trade obligations. This will likely become clearer in future negotiations with China.
For decades, China has violated a host of agreements related to intellectual property theft, currency manipulation, and support for domestic companies, among other issues. Notably, during Trump’s initial term, China failed to purchase any of the promised $200 billion worth of additional exports to the U.S.
Interestingly, while China is often in the spotlight for breaking promises, it’s not alone. Many of America’s allies have their share of the blame, particularly regarding dealings with American firms—a reality I encountered firsthand during my years in the private sector.
This issue is significant enough that the House Appropriations Committee recently expressed concerns in its August report regarding commercial disputes between U.S. businesses and foreign governments. It pointedly highlighted tensions with countries including the Democratic Republic of the Congo, Djibouti, Honduras, Kuwait, and Mexico.
In fact, information suggests that Mexico’s state-owned oil enterprise, Permex, owes American contractors a whopping $1.2 billion. Kuwait stands accused of neglecting its financial responsibilities to U.S. and other contractors, specifically regarding debts tied to the Al-Zour refinery, a major oil project in the Middle East.
Moreover, U.S. firms based in Honduras have relayed worries about politically driven threats of legal action and seizure of personal assets.
The House committee concluded that Secretary of State Marco Rubio should use various diplomatic methods to help resolve these disputes in a timely manner. This process will largely rely on American diplomats stationed abroad.
Current U.S. ambassadors in nations facing these challenges will need to apply pressure on local governments. Similarly, Ameer Ghalib, who recently testified for the ambassadorship to Kuwait, will also have a role in these efforts.
Having another Congressional hearing focused on the larger issue of foreign governments reneging on agreements with U.S. companies would also be beneficial.
The administration has voiced strong support for safeguarding American jobs and ensuring fairness in global trade, and they’ve shown some action toward these goals. Given that many in the administration have business backgrounds, they likely grasp the hurdles American companies encounter with foreign disputes.
Devoting similar attention to aiding American firms in resolving these conflicts, much like Trump did this year by pressing NATO allies to fulfill defense expenditure commitments, could significantly benefit U.S. businesses and workers.
If our allies wish to reap the benefits of partnership with the U.S., they must also uphold their obligations to our nation, our businesses, and our workforce. This approach not only puts America first but also fosters economic growth and prosperity.
