"Germany needs to do more, no question about it," German Foreign Minister Sigmar Gabriel said in Tallinn alongside his Estonian counterpart Sven Mikser.
"But we also have to consider whether Europe wants a Germany that invests €60 billion a year in the German army," he told reporters.
"This would be defence supremacy in Europe and I think our neighbours would not like to see that," said Gabriel, whose country currently spends 1.2 percent of its gross domestic product on defence.
The new US administration of President Donald Trump has put pressure on its allies in the NATO military alliance to make "real progress" on defence spending.
"I think it is correct that Europe accepts that these times when the US took on the primary burden of our defence are behind us," Gabriel said in the Estonian capital.
He noted that "Europe's GDP is the same as that of the US. So there is no reason to demand more of the US than of Europe."
In 2014, the alliance - originally founded in response to the Soviet domination of Eastern Europe - agreed to return defence spending to its commitment of 2.0 percent of GDP in the wake of Russian intervention in Ukraine and upheavals in the Middle East and North Africa.
So far, of the 28 NATO member countries, only the United States, Britain, Poland, Greece and Estonia have met the two percent target.
This year, Tallinn plans to spend 2.2 percent of GDP on defence in the face of a more assertive Russia.
Gabriel however said defence spending alone cannot guarantee global security today.
"Most wars and developments in the refugee crisis that we are currently facing can't be solved with more spending on equipment but with protecting people from famine, poverty and war," he said.