The Nato leaders, gathered in Brussels, held an unplanned emergency meeting earlier on Thursday after Mr Trump told allies to immediately increase their defence spending, diplomatic sources said.
"I have to say, I think it's very sad when Germany makes a massive oil and gas deal with Russia where we're supposed to be guarding against Russia, " Trump said, referring to the planned Nord Stream 2 pipeline.
"Many countries in North Atlantic Treaty Organisation, which we are expected to defend, are not only short of their current commitment of 2% (which is low), but are also delinquent for many years in payments that have not been made", he said, tweeting from the air en route to a key North Atlantic Treaty Organisation summit in Brussels.
"This year, since our last meeting, commitments have been made for over $40 billion more money spent by other countries."
"NATO is not a stock exchange where you can buy security".
Trump arrived on the back of a barrage of criticism of Europe on issues ranging from trade to energy and above all his claims that the continent freeloads on the back of America for its defence.
"NATO is much stronger now than it was two days ago", Trump said.
In a media conference where the US President again called himself a "very stable genius" and referenced his electoral college victory in the 2016 election, Mr Trump said he considers Russian President Vladimir Putin as a "competitor" rather than an enemy. The US is paying for Europe's protection, then loses billions on Trade.
Merkel stressed that Germany is NATO's second-biggest contributor when it comes to troops. I am very happy that today we are united in freedom, the Federal Republic of Germany.
UK's new Brexit strategy won't inhibit trade deals: minister
But many pro-Brexit lawmakers are furious at a plan they say will stop Britain forging an independent economic course. The Conservatives now have 316 MPs so 48 of them would need to write such letters to challenge May.
Also present was France's President Emmanuel Macron, who tried this year to charm Mr Trump into more harmonious transatlantic relationship, only to see the United States president withdraw from the 2015 Iranian nuclear deal and impose tariffs on European goods.
"We didn't know what to expect, it was a positive outcome", he said of the dinner in a Brussels park, where leaders were treated to an acrobatic display and saxophone music. "We have a tremendous relationship with Germany".
"We will see what happens - just a loose meeting".
Merkel said she welcomed the chance to have an "exchange of views" with Trump.
Trump scolded leaders here and criticized some countries, including Germany and Spain, for failing to contribute more to their defenses and for relying too heavily on the largesse of the United States.
The alliance lists the U.S.as spending an estimated 3.5 percent of its GDP on its military budget this year.
Trump said he made his anger clear to allies on Wednesday. East Europeans fear the deal could leave them vulnerable - but it also redirects pressure on Trump, who is under fire for his own Russian Federation issues and whose administration is facing off against special counsel Robert Mueller's Russian Federation probe.
He also said that his meeting with Russian President Vladimir Putin in Helsinki next week would be the "easiest" of the meetings he'll have while he's overseas.
Mr Trump dominated the day and is set to stay in the spotlight as he visits the United Kingdom and prepares for a summit with Russian president Vladimir Putin.