By Andrew Gray, Sabine Siebold and Jeff Mason

THE HAGUE (Reuters) -NATO leaders on Wednesday backed the big increase in defence spending that U.S. President Donald Trump had demanded, and restated their commitment to defend each other from attack after a brief summit in the Netherlands.

While Trump got what he wanted at the annual meeting, tailor-made for him, his NATO allies will be relieved that he committed to the fundamental principle of collective defence after less clear-cut language on Tuesday.

Trump told a press conference that "we had a great victory here", adding that he hoped that the additional funds would be spent on military hardware made in the U.S.

TRUMP THREATENS TO PUNISH SPAIN

However, he threatened to punish Spain after Prime Minister Pedro Sanchez declared it could meet its commitments to NATO while spending much less than the new target of 5% of GDP.

"I think it's terrible. You know, they (Spain) are doing very well ... And that economy could be blown right out of the water when something bad happens," Trump said, adding that Spain would get a tougher trade deal from the U.S. than other European Union countries.

In a five-point statement, NATO endorsed the higher defence spending goal - a response not only to Trump but also to Europeans' fears that Russia poses a growing threat to their security following the 2022 invasion of Ukraine.

The 32 allies' brief communique added: "We reaffirm our ironclad commitment to collective defence as enshrined in Article 5 of the Washington Treaty – that an attack on one is an attack on all."

Asked to clarify his own stance on Article 5 after recent ambiguous comments, Trump said: "I stand with it. That's why I'm here. If I didn't stand with it, I wouldn't be here."

MACRON BRINGS UP TRADE TENSIONS AT NATO SUMMIT

Trump had long demanded in no uncertain terms that other countries step up their spending to reduce NATO's heavy reliance on the U.S.

Despite an appearance of general agreement, French President Emmanuel Macron raised the issue of the steep import tariffs threatened by Trump, and the damage they may do to transatlantic trade, as a barrier to increased defence spending.

"We can't say we are going to spend more and then, at the heart of NATO, launch a trade war," Macron said, calling it "an aberration". He said he had raised it several times with Trump.

NATO Secretary General Mark Rutte, who hosted the summit in his home city of The Hague, said NATO would emerge as a 'stronger, fairer and more lethal' alliance.

The former Dutch prime minister said Trump deserved "all the praise" for getting NATO members to agree on raising defence spending.

Asked by a reporter if he had deployed excessive flattery to keep Trump onside during the summit, Rutte said the two men were friends and judgment of his approach was a matter of taste.

NEW NATO SPENDING TARGETS ARE DAUNTING

The new spending target - to be achieved over the next 10 years - is a jump worth hundreds of billions of dollars a year from the current goal of 2% of GDP, although it will be measured differently.

Countries pledged to spend 3.5% of GDP on core defence - such as troops and weapons - and 1.5% on broader defence-related measures such as cyber security, protecting pipelines and adapting roads and bridges to handle heavy military vehicles.

The additional spending will be a tall order for European nations, many of which have strained finances.

Ukrainian President Volodymyr Zelenskiy had to settle for attending the pre-summit dinner on Tuesday evening rather than the main meeting on Wednesday, although he met Trump separately after the conference ended.

The Kremlin has accused NATO of being on a path of rampant militarisation and portraying Russia as a "fiend of hell" in order to justify its big increase in defence spending.

(Additional reporting by Lili Bayer, Anthony Deutsch, Bart Meijer, Stephanie van den Berg, John Irish, Gram Slattery and Charlotte Van Campenhout;Writing by Andrew Gray and Keith Weir; Editing by Kevin Liffey)