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Economy

The economic implications of Trump's tariffs on Spain's olive oil and machinery sectors

Friday 07 - 11:35 By: Dakir Madiha

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US President Donald Trump's trade policies have recently cast a shadow over Europe, with the potential for 25 percent tariffs on EU-made goods. This move, which Trump claims is necessary to rectify what he perceives as unfair trade practices, has significant implications for various sectors in Spain, particularly olive oil and machinery.

Overview of tariff impacts on Spain

The economic impact of these tariffs on Spain may not be as severe as initially feared. According to a report by Bankinter, the Spanish Chamber of Commerce suggests that Spain is less exposed to these tariffs compared to other EU nations. While the EU's exports to the US account for approximately 4.6 percent of GDP, Spain’s figure is notably lower at just 2.3 percent. This indicates that Spain's economy is somewhat insulated from the direct effects of the tariffs.

Forecasts predict that if tariffs are implemented, Spain could face losses of up to €4.3 billion, which translates to about 0.27 percent of its GDP. Though this is a significant amount, it falls short of the more dire projections circulating in economic discussions.

Sectors at risk

Certain sectors in Spain are likely to bear the brunt of the tariff consequences. Key exports to the United States include machinery parts, chemicals, and agri-food products, with olive oil being a notable item of concern. Economic analyses indicate that industries such as electrical machinery could see sales decline by up to 28 percent, while the chemical and pharmaceutical sectors may experience a drop of around 16.5 percent. In the agri-food sector, exports could decrease by as much as 6 percent overall, with olive oil potentially facing a complete collapse in trade.

Agricultural sector vulnerabilities

Spain's agricultural sector, particularly its olive oil industry, is poised for significant disruption. Trump recently communicated to American farmers that increased production would be necessary due to forthcoming tariffs on imports starting April 2nd. This news has raised alarms within Spain, where the agri-food industry stands to lose around €3.5 billion in exports, primarily from olive oil, wine, and table olives.

Rafael Pico, director of the Association of Olive Oil Exporters (Asoliva), expressed that a blanket tariff scenario may be preferable as it would ensure equal treatment for all countries involved. However, targeted tariffs on specific imports from Spain would pose a more considerable threat, reminiscent of measures taken during Trump’s first term.

As the situation evolves, sectors such as wine and preserved foods are also preparing for the potential fallout. Spain's wine exports totaled €334 million, and canned fruit and vegetable sales reached €420 million in 2024, highlighting the importance of these markets.

The prospect of Trump's tariffs presents both challenges and opportunities for Spain, particularly in its olive oil and machinery sectors. While the overall economic impact may be limited, specific industries must adapt and seek new markets to mitigate the effects of these trade policies. As the situation develops, the resilience of Spain's agricultural exports will be tested in the face of shifting international trade dynamics.