Sigmar Gabriel said the focus needed to switch from military spending to combating the causes of the migrant and terror crises – poverty and climate change.
He also said Germany would struggle to match Nato demands due to calls for tax reductions in the country.
Mr Gabriel said: “We have to find 25 billion euros in a short time to meet the NATO target.
“I have no idea where we can find these billions of euros, at least not if we are also signing ambitious tax reduction agreements at the same time.”
He then risked outrage by suggesting, rather than criticising German spending, Donald Trump should thank the country for welcoming more than one million migrant since 2015.
He said this was necessary “as a result of failed military interventions of the past” – a thinly veiled dig at America’s operations in the Middle East since 2001.
The foreign minister said: “Let’s hold onto the direction, but not launch happily into a new arms race spiral because that alone will not guarantee our security.”
He added “rapid increase of defence expenditure” does not equate to a “measure for security”.
This is a developing story. Check back soon for more information.