Lorraine Williamson
Tensions between Spain and the United States are escalating after Donald Trump threatened punitive trade measures against the Iberian nation during a stormy NATO summit in The Hague.
The US president lashed out at Spain’s decision to limit its defence spending to 2.1% of GDP, far short of the 5% target Washington is now aggressively pushing.
Prime Minister Pedro Sánchez dismissed the demand as economically ruinous, insisting that such a sharp increase would compromise Spain’s social model. Trump’s response was blunt: unless Spain raises its military contribution, its key exports—such as olive oil, wine and pharmaceuticals—could face double tariffs and other restrictions.
Sánchez rejects “unsustainable” military target
At the heart of the row is a fundamental disagreement over priorities. While other NATO members, including Germany, Poland and the Netherlands, pledged steep increases in defence budgets, Sánchez made clear that Spain would not follow suit. He argued that matching Trump’s 5% demand would mean diverting an estimated €300 billion from essential services like healthcare, pensions and education by 2035.
“We may be the only ones saying the emperor has no clothes,” Sánchez told reporters. “We will not dismantle our welfare state to satisfy an unrealistic military benchmark.”
Though Spain signed the NATO summit declaration, it stopped short of formally committing to the 5% target.
Trump escalates with tariff threats
Trump—who has long criticised European allies over what he sees as unfair defence contributions—singled out Spain as the only NATO country “refusing to pay its fair share.”
“They’ll pay double,” he warned. “If they won’t meet their obligations through defence, they’ll pay through trade.”
Among the products he listed for possible retaliation were wine, olive oil, pharmaceuticals and industrial machinery—sectors vital to Spain’s export economy. Trump also suggested Spanish firms could be barred from US public contracts or penalised under a digital services tax.
In unusually pointed remarks, he even claimed Spain’s economy “could be completely destroyed if something happens,” fuelling concern over the unpredictability of US foreign policy under his renewed leadership.
Spain holds the line – and looks to Brussels
Despite the rhetoric, the Spanish government is not backing down. Economy Minister Carlos Cuerpo reiterated Spain’s commitment to NATO and insisted that any trade dispute must be resolved through the European Union, not unilateral US action.
High-profile figures, including EU foreign affairs chief Josep Borrell and Second Deputy Prime Minister Yolanda Díaz, have publicly backed Sánchez, framing the row as a defence of European sovereignty and social cohesion.
What’s at stake for Spanish exporters?
The US is Spain’s sixth-largest export market, with €18.2 billion in goods shipped in 2023. Olive oil, pharmaceuticals, wine, electronics and machinery dominate the trade portfolio—many of them produced by SMEs in regions like Andalucia, Catalonia and La Rioja.
Experts warn that even if the US cannot legally single out Spain under WTO rules, Washington could target products Spain exports in large quantities. That could deal a serious blow to smaller businesses, while also raising prices for US consumers.
Previous trade tensions—such as the 2019 Airbus-Boeing dispute—have shown that Trump is willing to weaponise tariffs, regardless of the broader impact on American households.
Pressure mounts on the EU
Analysts say the dispute could test European unity. While Spain counts on Brussels to defend its interests, the EU’s response to similar threats in the past has often been cautious and fragmented. Whether the bloc will stand firm against Trump’s aggressive trade posturing remains unclear.
Meanwhile, Trump’s threats mark a return to his trademark “America First” diplomacy—prioritising transactional relationships and public pressure over multilateral consensus.
Spanish government chooses social stability over military spend
For now, Spain appears resolute. Its refusal to sacrifice social spending for military build-up puts it at odds with Washington—but also highlights a deeper debate across Europe about the role of NATO, sovereignty, and the limits of American influence.
Whether Trump’s threats evolve into full-blown tariffs—or a broader transatlantic trade war—will likely depend not just on Sánchez, but on how firmly the EU is willing to defend one of its own.