Former President Donald Trump announced Wednesday he had ordered Treasury Secretary Scott Bessent to cut off all trade with Spain, citing the country's refusal to increase military spending and its stance on U.S. actions in Iran.
Trump, who has previously pressured NATO allies to meet defense spending targets, called Spain a "wasted cause" and a "terrible partner in NATO." He stated that the U.S. does not "want to do any trade business with Spain anymore" and predicted that Spain would seek to resume trade once its access to the U.S. market is removed.
Spain's Prime Minister Pedro Sanchez's office responded that Madrid "maintains an excellent social, cultural, and economic relationship with the U.S., and we have no intention of seeing that change." The office characterized Trump's comments as "a matter of routine."
Defense Spending and NATO Commitments
Trump has consistently urged NATO members to increase their defense expenditures. While all NATO allies reportedly met a 2% defense spending threshold in 2025, NATO Secretary General Mark Rutte supports Trump's call for members to reach 5% of GDP in defense spending by 2030. Spain, however, currently spends approximately 2.1% of its GDP on defense under Sanchez.
Economic Impact of Trade Cutoff
Bilateral trade between the U.S. and Spain amounts to approximately $47 billion annually. The U.S. exports energy products, industrial machinery, aerospace equipment, and pharmaceuticals to Spain. In return, the U.S. imports a variety of goods from Spain, including pharmaceuticals, specialty foods, wine, perfumes, cosmetics, machinery, and electronic equipment.
In 2025, U.S. imports of Spanish goods totaled $22.1 billion. Spanish food products constitute about 18% of these imports, with oils and fats making up 14% of that segment. Spain is the world's leading producer and exporter of olive oil, accounting for nearly half of the global supply. U.S. imports of Spanish virgin olive oil alone are valued at over $860 million annually, representing close to 90 million kilograms of product. The U.S. imports most of the olive oil it consumes, producing less than 2% domestically. A trade cutoff could lead to increased prices for olive oil and other Spanish goods in the U.S., impacting retailers, restaurants, and food manufacturers.
Trade Agreements and Retaliation Options
Any attempt to cut off trade with Spain could disrupt the broader trade agreement between the U.S. and the European Union. Spain's foreign trade is governed by the EU's trade deals, which were negotiated as a bloc. Under this agreement, the U.S. has a 15% tariff ceiling for most European goods.
Trump could potentially use the International Emergency Economic Powers Act (IEEPA) to restrict or block economic deals if he declares a national emergency, citing an "unusual or extraordinary threat" to U.S. national security, foreign policy, or the economy. Historically, the IEEPA has been invoked against countries like Iran, Iraq, Sudan, and Syria.
Alternative measures include imposing tariffs or quotas on specific goods under Section 232 of the Trade Expansion Act of 1962, should the Commerce Department deem them a threat to national security. Section 301 of the Trade Act of 1974 allows for penalties against Spain if its actions are deemed unfair or burdensome to U.S. commerce.
During his previous presidency, Trump imposed a 34.75% tariff on Spanish black olives, arguing that producers received unfair subsidies. This measure, though later challenged by the World Trade Organization, significantly reduced Spain's share of the U.S. black olive market.
In March of the current year, Trump instructed Bessent to cut off trade with Spain, but no official actions were recorded on the Federal Register, and trade has continued normally.