Pete Hegseth warns NATO allies of potential US military review in Europe

US Defense Secretary Pete Hegseth told NATO defense ministers in Brussels on June 18 that the United States will conduct a six-month review of its military forces stationed across Europe.

Hegseth characterized NATO partners’ longstanding reliance on US military support as “free-riding,” and made clear that America’s presence on the continent should not be considered indefinite.

What the review actually involves

The six-month evaluation will assess the effectiveness of US military deployments throughout Europe, with consultations involving Congress built into the process. The outcome could meaningfully alter American troop levels on the continent.

Hegseth’s push goes beyond the existing NATO guideline that member states spend at least 2% of GDP on defense, a target that many allies still struggle to meet. Internal discussions have floated ambitions closer to 5% of GDP.

The broader strategic shift

Hegseth has been particularly vocal about what he sees as a mismatch between the security threats Europe faces, particularly from Russia, and the resources European governments are willing to commit. His argument is that if the threat is real enough to justify tens of thousands of American troops on European soil, it should be real enough for European nations to fund their own defense at serious levels.

What this means for investors

European defense stocks have already been on a tear as the continent grapples with the reality that American security commitments are no longer unconditional. Any concrete reduction in US troop levels would accelerate that trend, as European governments would need to fill capability gaps with domestic procurement.

Hegseth has previously expressed support for Bitcoin as a strategic asset within national security frameworks, a position he articulated earlier in 2026. While no digital asset topics surfaced during the NATO announcement, increased European defense spending means higher government borrowing, which means pressure on sovereign debt markets.

The six-month review timeline means concrete policy shifts, if any, likely won’t materialize until late 2026 or early 2027.

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