Trump’s threats against Spain: rhetoric or real economic risk?

Thursday 26 June 2025 - 15:20

By: Dakir Madiha

Trump’s threats against Spain: rhetoric or real economic risk?

US President Donald Trump has escalated tensions with Spain, threatening to impose double tariffs after Spain’s refusal to commit to spending 5 percent of its GDP on defense. The remarks, made during this week's NATO summit in the Netherlands, have sparked debate over their feasibility and potential impact, both economically and politically, for Spain.

NATO standoff and trade threats

Trump’s demands for increased defense spending from NATO allies have been a recurring theme of his presidency. At the summit, Spanish Prime Minister Pedro Sánchez declined to commit to Trump’s 5 percent defense spending target—well above NATO’s 2 percent guideline—and avoided direct engagement with the US President.

In response, Trump vowed to “make them pay twice as much,” implying targeted tariffs on Spanish exports to recoup what he perceives as a shortfall in defense contributions. Experts, however, caution that these threats may be more rhetorical than actionable.

Can tariffs on Spain be implemented?

While Trump’s statements grabbed headlines, experts argue that imposing tariffs solely on Spain would be legally and logistically difficult. Federico Steinberg, senior researcher at the Elcano Royal Institute, explained to El País that trade policy in the European Union is centrally governed by Brussels, not individual member states. “It is very difficult, if not impossible, to establish trade penalties that only affect one country,” Steinberg noted.

If the US were to target Spanish exports, key sectors like olive oil, wine, electrical appliances, and pharmaceuticals could feel the impact. Spain exported approximately €1.2 billion in oils and €400 million in wine last year, making these sectors particularly vulnerable. However, any measures against Spanish products would likely spill over to other EU countries, such as Italy and France, which export similar goods. This interconnectedness within the EU trading bloc complicates unilateral action against Spain.

Ángel Talavera, chief economist for Europe at Oxford Economics, agrees that imposing tariffs through special mechanisms is unlikely. He notes that during Trump’s first term, the US imposed tariffs on Spanish olives, causing significant export losses initially. However, Spain managed to redirect sales to other markets, mitigating long-term damage.

Economic risks for Spain

Should the US find a way to penalize Spanish exports, sectors such as machinery, electrical appliances, pharmaceuticals, and agricultural products would likely be targeted. Raymond Torres, director of economic analysis at Funcas, warns that while agri-food products like olives and wine can recover through market diversification, pharmaceuticals—one of Spain’s key exports to the US—may face greater challenges.

Despite past tariff threats, Spain’s economy has shown resilience, with its export sector adapting to shifting trade conditions. For now, Trump’s threats remain theoretical, as any significant trade penalties would require navigating EU rules and broader geopolitical considerations.

Political implications for Sánchez

Domestically, Trump’s threats could inadvertently strengthen Prime Minister Sánchez’s position. Facing corruption scandals and pressure from opposition parties, Sánchez may welcome the distraction of an international dispute. By standing up to Trump and refusing to bow to NATO’s spending demands, Sánchez could bolster his support among left-wing allies, including Sumar, Podemos, and Esquerra Republicana de Catalunya.

A public clash with Trump also allows Sánchez to frame himself as resisting the interventionist policies of the military-industrial complex, a stance that resonates with Spain’s left-leaning electorate. While right-wing opposition parties such as the Popular Party and Vox call for Sánchez’s resignation, a strong anti-Trump narrative could help him consolidate support within his coalition.

What’s next?

Whether Trump’s threats translate into concrete economic measures remains uncertain. For now, the standoff appears to be more about rhetoric than actionable policy. However, the episode underscores the complex interplay between international diplomacy and domestic politics, with Sánchez leveraging the confrontation to navigate political turbulence at home.

While Spain’s economy may face limited risk from Trump’s threats, the prospect of trade disputes highlights the importance of unity within the EU trading bloc and the potential consequences of escalating geopolitical tensions.