Prime Minister Anthony Albanese has not ruled out the possibility of Australia increasing its defense budget by billions annually, as the Trump administration encourages allies to enhance their military expenditures.

Albanese discussed this topic on Today this morning following Defence Minister Richard Marles’ visit to Washington DC, amidst ambiguity regarding his meetings with the US Defense officials.

He mentioned that his government has already pledged an additional $10 billion in short-term funding for the Australian Defence Force, and did not dismiss the prospect of further increases.

However, US officials, including Defence Secretary Pete Hegseth, are urging Australia to aim higher with a target of 3.5 per cent GDP, around $97 billion annually.

Such a move would mean the Treasury having to find an extra $40 billion, putting a severe strain on other government spending programmes.

The Trump administration is adamant that its Indo-Pacific and European allies should enhance their military commitments to face rising security challenges and reduce the burden on the US.

In June, US President Donald Trump persuaded members of the NATO alliance to invest 5 per cent of their GDP on defence and security.

The US asserts that China’s goals concerning Taiwan threaten global peace and stability, necessitating regional allies such as Australia to enhance their defense efforts.