North Atlantic Treaty Organization (NATO) members may give into U.S. President Trump's demands and fork out more cash to fund their respective defense sectors, according to Washington-based think tank, the Cato Institute.

"I expect to see a modest increase in military expenditures by a number of NATO countries over the next few years. This would be beneficial, for them, and for global security, generally," Christopher Preble, Cato's vice president for defense and foreign policy, told CNBC on Thursday.

During his election campaign, Trump reproved European members for not doing enough to uphold their part of the alliance and rebuked them for not paying their bills. In a July interview with the New York Times, he said the U.S. would offer military protection to NATO countries in the case of an attack only if members offered reasonable reimbursement.

As of 2015, only five of the 28 NATO nations, including the U.S., spent the required minimum of two percent of gross domestic product on defense. For 2016 however, IHS Jane's found overall NATO defense expenditure increased for the first time since 2010 in response to growing strategic challenges posed by the Islamic State and Russia.