Trump at Davos: NATO 5% push, tariff warnings for Europe

In his first major international address since returning to the White House, US President Donald Trump made it clear that his second term would see no softening of his stance on trade, defence, or global diplomacy.

Speaking via videoconference at the World Economic Forum in Davos on Thursday, Trump issued a stark warning to European allies, demanding higher military spending, vowing to protect US industry with tariffs, and suggesting that lowering oil prices could end the war in Ukraine.

Delivered in Trump’s typically blunt style, the speech signalled a renewed push for his ‘America First’ agenda, one that could further strain relations with European leaders already wary of his return.

Trade: Make in America or pay a tariff

Trade was at the forefront of Trump’s remarks, as he reiterated his long-standing demand that businesses prioritise US manufacturing.

His message was simple: companies that choose to produce outside America would face financial consequences.

“My message to every business in the world is very simple: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth. But if you don’t, you will have to pay a tariff,” he declared.

Trump announced that companies manufacturing within the United States will benefit from a corporate tax reduction, dropping from 21% to 15%. He claimed this would be "by far the lowest tax rate" among the world’s largest and most economically powerful nations.

He then turned his criticism towards the European Union, describing its regulatory system as an obstacle to investment.

Drawing from his own business experience, Trump recounted a failed real estate project in Ireland, where he secured national approval within a week but was told that EU-level clearance would take five to six years. The delay, he said, made the investment unviable.

Beyond bureaucracy, Trump took aim at the EU’s trade policies, accusing the bloc of treating American goods unfairly.

“The EU does not take our farm products, does not take our cars, yet they send cars to us by the millions,” he argued, blaming European tariffs and restrictions for what he described as an imbalanced trade relationship.

His rhetoric echoed the tariff disputes of his first term, raising concerns that a fresh US-EU trade conflict could be on the horizon.

NATO: A new defence spending threshold

Trump then shifted focus to NATO, reviving one of his most contentious demands—greater financial contributions from alliance members. While NATO countries had previously committed to allocating at least 2% of GDP to defence, Trump insisted this was insufficient.

"I'm also going to ask all NATO nations to increase defence spending to 5% of GDP, which is what it should have been years ago," he said.

His remarks were a direct challenge to European leaders, many of whom have faced domestic opposition to military budget increases. Trump took credit for pressuring allies to meet the existing 2% target and warned that he expected even greater commitments moving forward.

The demand is likely to ignite debate within NATO, where several countries have only recently begun meeting the 2% threshold set in 2014. By calling for more than double that amount, Trump signalled that alliance contributions would once again be a key point of contention in transatlantic relations.

Ukraine: Lower oil prices could end the war

Perhaps the most controversial moment of Trump’s speech came when he linked oil prices to the war in Ukraine. “If the price [of oil] came down, the Russia-Ukraine war would end immediately,” he claimed, arguing that high energy revenues were allowing Moscow to sustain its military operations.

He pledged to pressure Saudi Arabia and OPEC to lower oil prices, suggesting that economic measures, rather than military aid, could be the key to ending the conflict. Trump also reiterated his willingness to engage directly with Russian President Vladimir Putin, stating, “I would like to be able to meet with President Putin soon and get that war ended. It’s time to end it.”

While he offered no concrete details on how he would negotiate peace, Trump insisted that “Ukraine is ready to make a deal.”

His comments are likely to provoke strong reactions in Europe, where many leaders remain sceptical of any approach that could be seen as pressuring Ukraine into a settlement favourable to Moscow.

Energy: LNG to Europe will continue

Amid speculation that the US might limit liquefied natural gas (LNG) exports to prioritise domestic supply, Trump sought to reassure European allies.

Addressing TotalEnergies CEO Patrick Pouyanné, he stated: “If we make a deal, we make a deal—you’ll get it.”

He also pledged to fast-track approvals for energy projects, including LNG plants, in a bid to boost supply and stabilise prices.

A familiar tone, a new political landscape

Trump’s speech in Davos carried all the hallmarks of his first presidency: Direct, combative, and unapologetically focused on US interests.

Yet the global landscape has changed since he last held office. Europe has spent years forging new trade alliances, NATO has strengthened its unity, and the war in Ukraine has reshaped security priorities.

With his return to power, Trump has made it clear that he intends to rewrite the terms of US engagement with the world.

For European leaders, his speech served as both a warning and a reminder: the Trump era is back, and it will not be business as usual.