With U.S. President Donald Trump demanding allies boost defence outlays to as much as 5% of GDP, NATO’s leadership is floating a new benchmark beyond the longstanding 2%. NATO Secretary-General (and former Dutch PM) Mark Rutte has proposed a 3.5% of GDP defence spending target, plus another 1.5% for broader security efforts, to collectively reach 5%. This idea, discussed in meetings between Rutte and industry leaders, reflects the reality that 2% is increasingly seen as a floor, not a ceiling, for wealthy allies. Already 23 of NATO’s 32 members hit 2% in 2024 (a jump from just 6 members in 2021), and Trump’s push is shifting the Overton window of what is expected. If NATO formally adopts 3.5% as guidance, it would lock in a far more aggressive spending trajectory for Europe. Such a move would be unprecedented – essentially compelling many allies to roughly double their defence budgets in the coming years. It would also force difficult trade-offs in national budgets and perhaps renewed debates about burden-sharing within Europe. Nonetheless, the discussion itself signals NATO’s evolving posture: deterrence against Russia (and future threats) may require not just meeting an arbitrary target, but fundamentally rearming to a much higher level. European defence contractors and markets are already anticipating this direction, but implementation will hinge on political will after the immediate Ukraine crisis stabilizes.