Angela Merkel has led the push against President Trump's demands
The German Chancellor has resisted the ultimatum, claiming Germany will not speed up on any existing plans to ramp up the country’s military budget by 2024.
Her defiance has been met with backing from the president of the European Commission, Jean-Claude Juncker, who has insisted countries not cave in to President Trump’s demands.
Earlier this week, US Defence Secretary James Mattis warned NATO that political times had changed since Trump’s election, meaning it was no longer possible for allies to shirk their defence responsibilities.
I don't like our American friends narrowing down this concept of security to the military
The thinly veiled threat saw Mr Mattis confirm that Washington intended to “moderate” its commitment to Europe if their demands were not met.
Mr Mattis addressed delegates at the Munich Security Conference, stating that Europe now faced “threats on multiple fronts”, adding that times were now increasingly unstable.
However, the ultimatum was swiftly batted down by Mr Juncker, who said he was “very much against letting ourselves be pushed into” increased spending.
Merkel's defiance has been met with backing from the president of the European Commission
He rallied on, saying: “I don't like our American friends narrowing down this concept of security to the military.
“If you look at what Europe is doing in defence, plus development aid, plus humanitarian aid, the comparison with the United States looks rather different. Modern politics cannot just be about raising defence spending.”
NATO guidelines call on all members of the collective defence alliance to spend 2 per cent of its GDP on military budgets.
Germany had already increased defence spending by 8 per cent this year
However, in reality, only five do – the US, Britain, Greece, Estonia and Poland – while Germany, Italy and Spain spend around half that amount.
Angela Merkel retaliated to US demands saying her country would stick to its current defence plans, and is “conscious of its responsibilities”.
German Defence Secretary Ursula Von der Leyen acknowledged that Germany’s refusal to increase spending would result in her country being unable to rely on protection from the US.
She hit back at President Trump, warning him not to put his European allies on the same level as an “aggressive Russia”, saying: “A stable European Union is just as much in the American interest as a united Nato.”
The Chancellor said Germany had already increased defence spending by 8 per cent in this year's budget.
She said: "We must do more here, no question, but the matters of development aid and crisis prevention are also important.”
- EUROZONE SHOWDOWN: Tsipras warns EU ahead of bailout negotiations
- ‘A LOT of damage’ Juncker fears Brexit DOMINO EFFECT
- Juncker BLASTS the UK over pre-Brexit trade deals