Australia is standing firm on defence spending despite European nations vowing to rapidly ratchet up expenditure under pressure from US President Donald Trump.

On the sidelines of the NATO summit in the Netherlands, Defence Minister Richard Marles said Australia would decide its own spending levels to meet its own military needs.

That risks drawing a rebuke from Trump, who made clear he expects allies to drastically step up to reduce their reliance on the US.

NATO countries, of which Australia is not a member, agreed to increase defence spending targets to 5 per cent of GDP.

However, Spain refused, prompting Trump to threaten to punish it with a tougher trade deal.

“You know what we’re going to do? We’re negotiating with Spain on a trade deal and we’re going to make them pay twice as much,” he said.

Australia also wants to negotiate a reprieve from US tariffs on imports, including a 50 per cent levy on steel and aluminium.

But Marles maintained Australia would stick with its own defence spending, which will increase from 2 to 2.3 per cent by 2033/34.

“Obviously, a very significant decision has been made here in relation to European defence spending, and that is fundamentally a matter for NATO,” he said.

“We’ve gone through our own process of assessing our strategic landscape, assessing the threats that exist there, and the kind of defence force we need to build in order to meet those threats, to meet the strategic moment, and then to resource that.

“What that has seen is the biggest peacetime increase in Australian Defence spending.

“That is a story which is understood here and we’ll continue to assess what our needs are going forward. And as our Prime Minister has said, we will resource that.”

Marles’ comments were backed by Finance Minister Katy Gallagher, who said the Albanese government had put billions of dollars into defence.

“We understand the environment we’re working in. We take the advice of our agencies seriously. When they come to us and say, this is the capability we need, and this is the funding that’s required, we have provided that funding and that’s the approach we’ll continue to take,” she told ABC TV on Thursday.

Marles did not speak directly with Trump, nor US Defence Secretary Pete Hegseth at the NATO meeting in The Hague, despite intensive efforts by government officials to tee up a first face-to-face meeting of an Australian minister with Trump.

He did, however, meet Ukrainian Defence Minister Rustem Umerov as Australia reaffirmed its support of Ukraine in its fight against Russia.

Marles announced Australia will deploy an RAAF Wedgetail surveillance aircraft to Poland, along with 100 defence force personnel, to help provide visibility for key humanitarian and military supply routes into Ukraine.

The aircraft will be deployed for three months, concluding in November. It follows an earlier six-month deployment that was highly valued by the Ukrainians.

Australia has also announced new financial sanctions and travel bans on 37 individuals and seven financial entities involved in Russia’s defence, energy, transport, insurance, electronics and finance sectors, as well as “promulgators of Russian disinformation and propaganda”.

Marles also signed an agreement with the NATO Support and Procurement Organisation, increasing co-operation in non-combat activities including logistics and capability acquisition.

-AAP