The country’s defence budget has become a major election issue as the German Chancellor tries to win a record fourth term.
His Social Democratic Party (SPD) hopes the message will win over German voters who are critical to the outspoken US president.
Earlier this year, Mr Trump said Berlin owed the alliance “vast sums of money” for the “powerful, and very expensive, defence it provides to Germany”.
Mr Schulz is trailing behind Mrs Merkel in opinion polls six weeks before the crunch election on September 24.
Earlier this week, German foreign minister Sigmar Gabriel, of the SDP, said defence was one of the key issues of the campaign.
He branded the upcoming election a vote on whether Germany “remained a force for peace or followed Trump’s armament madness”.
However, despite its repeated attacks on Mrs Merkel, the SDP has yet to reveal details of its policy on Nato and military spending.
But senior MP Rolf Mutzenich said the party wants to spend more on humanitarian aid to help resolve conflicts peacefully.
He told Politico: “When it comes to defence spending, [Merkel’s] conservatives traditionally represent a position that seems to be in line with the current position of the White House.”
But Defence Minister Ursula von der Leyen, of Merkel’s Christian Democratic Union (CDU), defended her leader’s stance.
She said it was in Europe’s best interest that Berlin keeps its word on committing to spending two per cent of GDP on defence.
Ms von der Leyen also said the SPD’s rhetoric was part of a “totally messed-up election campaign.”
Germany’s two biggest left-wing parties, the Greens and the Left Party, have both signalled their opposition to the two per cent Nato target.
The Greens are worried about a new arms race while the Left Party has controversially called for Nato to be disbanded.
Left Party co-chairman Bernd Reixinger said: “In a world that is coming apart at the seams, it is imperative that we disarm.”
The right-wing Alternative for Germany (AfD) party, which is critical of Nato, has yet to declare whether it would meet the alliance’s spending benchmark.