To date, debates in democracies over how to square competing budget demands at a time of ageing populations and tepid growth — overlaid by the threat of Trump’s tariff regime — have been resolved with wider deficits and higher debt. A number of US allies have also already begun to plug gaps in their defences.
US President Donald Trump’s push for Indo-Pacific allies to ramp up military spending to counter growing threats from the likes of China and North Korea is running into the hard reality of fiscal limits and jittery bond markets.
As with Europe, many economies in Asia have invested at much lower levels on defence than the US, expecting the support of Washington’s military might. While regional powers like India and Australia acknowledge this must change to address the new geopolitical reality of China’s ascent, few see the Trump administration’s target of 5% of gross domestic product as economically or even politically viable.
