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President Donald Trump on Wednesday threatened to cut off all trade with Spain, due to Madrid’s refusal to increase military spending and its airspace restrictions on the US’s attacks on Iran.
Trump has warned NATO allies against playing “funny math” with their defense spending — by either failing to lay out clear plans to meet the figure or including non-military expenses — to European allies.
While every allied country did hit the 2% defense spending threshold in 2025, NATO Secretary General Mark Rutte backs Trump’s insistence that all members are on track to raise their defense spending to 5% of GDP by 2030.
However, Spain appears far from that goal on paper. Socialist President Pedro Sanchez has refused to spend more than 2.1% of the country’s GDP on defense.
As for Trump’s latest threat to cut off trade, Sánchez’s office said that Madrid “maintains an excellent social, cultural, and economic relationship with the US, and we have no intention of seeing that change.”
Such trade cutoffs aren’t easy to achieve.
Ending all trade with the country will limit Americans’ access to common household goods, such as olive oil, and interfere with existing agreements with the European Union.
Trump: ‘Spain is a wasted cause’
On Wednesday, Trump said “Spain is a wasted cause,” and that the US doesn’t “want to do any trade business with Spain anymore.” The president said he ordered Treasury Secretary Scott Bessent to cut off all trade for the second time this year.
“Spain is a terrible partner in NATO. They don’t participate, they don’t pay. I don’t want to have anything to do with Spain. Cut off all trade with Spain, please, including visits… Watch them come running back,” Trump said.
“We don’t have to trade with them. I don’t want to do any more trade with them, alright? Immediately,” he added.
Trump said that Spain would put down their “hostile” front when they “call up and they [say], ‘Please, please. We want to trade with you, sir. We want to trade with you, sir.”
The president added that Spain makes so much money from the US, and everyone will see the country making much less without American business.
The cost of cutting trade: olive oil imports
The US and Spain trade roughly $47 billion annually in goods. While the US exports energy products, industrial machinery, aerospace equipment, and pharmaceuticals to Spain, the US imports more common goods from Spain.
Common Spanish goods imported include Spanish pharmaceuticals, oils, specialty food products, wine, perfumes, cosmetics, and various machinery and electronic equipment.
The US imported $22.1 billion worth of Spanish goods in 2025. However, this figure dropped by $2 billion at the start of Trump’s second administration.
Between April 2025 and April 2026, the exports from the US to Spain decreased by $747 million, and imports decreased by $179 million. Only 4.9% of Spanish exports go to the US, and 1.2% of total US exports go to Spain.
However, 18% of Spanish imports account for food products, with 14% of that representing oils and fats.
Spain is the world’s leading olive oil producer and exporter — accounting for nearly half of all global supply. Annual US imports of Spanish virgin olive oil represent close to 90 million kilograms of product, exceeding $860 million worth of product, according to the World Bank Group.
If the US seeks to officially cut off trade with Spain, a significant share of imports would disappear. Many olive oils sold in US grocery stores are either under Spanish brands or contain Spanish oil.
Prices of olive oil — among other products and goods — could also increase.
The USDA reported that the US produces less than 2% of the olive oil the country consumes, forcing the US to import from other countries such as Italy, Greece, Portugal, Tunisia or Turkey.
According to the International Olive Council, the US is the world’s largest olive oil importer. Olive oil production is limited in the short term, meaning that an increased demand from the US would likely push prices higher.
This could also cause US retailers to lose access to certain products, and cause restaurants and food manufacturers to rethink their prices.
Cutting off complete trade is not as easy as it seems
During the NATO press conference on Wednesday, Trump was asked about the trade agreement with the European Union and whether he would seek to cut trade with Spain.
“We’ll see what happens with the E.U. They have treated us very badly for years and they took advantage,” he responded.
Under the trade agreement the US has with the EU — which took effect on July 1 —Spain’s foreign trade is governed by the bloc’s deals. Trade negotiations were conducted as a single bloc, rather than individual member states.
Under the agreement, the US established a 15% tariff ceiling for most European goods, and granted preferential market access for certain US farm produce, seafood and extended tariff-free status for US lobster.
If Trump does cut ties with Spain, he could be disrupting the entire EU pact — potentially leading to a trade war.
How Trump can retaliate against Spain
Under the International Emergency Economic Powers Act, the president has the power to restrict or block foreign countries’ economic deals. This act is only possible if Trump can prove that such a country presents an “unusual or extraordinary threat” to US national security, foreign policy or the economy — and declare the situation a national emergency.
The IEEPA has been used previously with Iran in 1979, Iraq in 1990, Sudan in 1997, and Syria in 2004.
Other options Trump can seek that’s not as intense as a full embargo do exist. Under Section 232 of the Trade Expansion Act of 1962, the president can impose tariffs or set quotas on specific goods if the Commerce Department sees them to pose a threat to national security.
Another option is Section 301 of the Trade Act of 1974. Trump could impose penalties on Spain if actions are determined to be unfair or burdensome to US commerce.
During Trump’s first presidency, the administration used “anti-dumping rules” — under the 1930 Tariff Act — to impose a 34.75% tariff on Spain’s black olives stating that “producers received unfair subsidies.” The policy was quickly challenged after and overturned by the World Trade Organization. However, Spain’s share of the US black olive market plummeted from 49% in 2017 to 19% in 2024.
In 2025, Trump said that he “may” punish Spain for refusing to reach the 5% threshold in military spending. Trump escalated in March by instructing Bessent to cut off trade with Spain. However, the two countries continued to trade normally, and no investigations have been disclosed on the Federal Register.
The office of Sánchez responded to Trump’s comments, calling them “as a matter of routine” and added that Madrid “maintains an excellent social, cultural, and economic relationship with the US, and we have no intention of seeing that change.”
With Post Wires.
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