United States (US) President Donald Trump is planning to punish Spain for refusing to increase its spending on the NATO Western military alliance.

Trump has effectively told European nations they must stop relying on the US for military protection and start standing on their own two feet, by ramping up spending on their security to 5 percent of their gross domestic product, or GDP.

Countries in the 32-member alliance said on Wednesday they will indeed begin to move toward spending the requisite 5 percent – all of them, that is, except for Spain.

READ MORE: NATO summit pushes 5% defense spending goal amid rising tensions

A frustrated Trump responded by saying Madrid's decision was "very terrible" and that he will make the country pay over the odds for the trade deal the European Union (EU) is currently seeking with the US.

"We're negotiating with Spain on a trade deal. We're going to make them pay twice as much," Reuters quoted him as saying, referring to trade talks the EU is carrying out on behalf of all of its 27 member nations.

US business news channel CNBC quoted Trump as saying: "You know, they are doing very well. The economy is (doing) very well. And that economy could be blown right out of the water with something bad happening."

He said he was "actually serious about that".

"I like Spain … it's a great place and they are great people, but Spain is the only country out of all of the countries that refuses to pay," the president added, saying it looks as if the country is after a "little bit of a free ride".

Trump insisted he is not "going to let that happen".

"It's unfair," he added.

NATO nations committed on Wednesday to spend 5 percent of GDP on defense and security by 2035, up from today's 2 percent target, but, while some said the commitment would be difficult to achieve, Spain was the only one that said flat-out it would not sign up to the idea.

Spain's Prime Minister Pedro Sanchez said his country would be able to meet its NATO commitments without increasing its spending.

READ MORE: NATO countries agree to hike defense spending to 5% of GDP by 2035

Sanchez said spending 2 percent of GDP was "sufficient, realistic, and compatible with the welfare state".

Ironically, Spain actually failed to meet that 2 percent target in 2024, instead spending 1.2 percent of GDP on its military, which was the lowest percentage among all of NATO's member nations. But a total of nine NATO member countries are currently failing to meet the 2 percent target.

NATO members said on Wednesday their "ironclad commitment" to boost their collective defense capabilities over the coming decade amounts to a "quantum leap" forward. And NATO Secretary General Mark Rutte described the commitment as "transformational".

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