Trump orders halt to US trade with Spain over NATO spending, Iran

US President Donald Trump on Wednesday ordered an immediate halt to all trade with NATO ally Spain, escalating tensions over defence spending and the Iran war, despite European Union rules requiring trade negotiations to be conducted as a single bloc.

During a NATO summit in Ankara, which European leaders had hoped would cap rifts within the military alliance, Trump reignited the dispute with Spain, calling it a “terrible partner”, and made renewed claims on Greenland, although he later changed tack and said there had been love and “a lot of unity”.

Spanish Prime Minister Pedro Sanchez played down the rift and said he had had a “very cordial” conversation with Trump during the summit.

It was the second time Trump has instructed Treasury Secretary Scott Bessent to halt commerce with Spain over its refusal to commit to NATO’s new defence spending target of 5% of GDP. However, after his first such promise in March, trade between the two countries continued normally.

“Spain doesn’t agree to anything, and you shouldn’t carry them,” Trump told NATO Secretary General Mark Rutte, who tried to soothe the tension by saying that Spain “made a huge step last year” by raising its spending to 2%, though he added that “there are still issues we have to solve”.

Trump has repeatedly expressed frustration with Spain after Sanchez, a Socialist who leads a minority leftist government, refused to let the US use its airspace or bases for the Iran war.

NO TRADE WITH SPAIN

“I don’t want to do any trade with them, alright?” Trump said, turning to Bessent, who replied: “Yes, sir.”

Trump then added, “Don’t even talk to them. They’re hopeless. They’re bad people… They make so much money with us, and we’re going to see that they make a lot less.”

Later, Sanchez told a news conference that he and Trump discussed the soccer World Cup, hosted by the US, and golf, but not military spending.

He reiterated that Spain was a reliable NATO ally, announcing an unspecified fresh deployment of Spanish troops to Finland to join NATO’s Arctic Sentry mission, adding: “The facts are the facts.”

Spain was among the fastest-growing military spenders in NATO over the past two years, he added, noting that Spain’s strong economic growth was giving it extra fiscal headroom to meet its defence commitments.

As trading partners, Spain and the US have “very, very strong ties that have endured regardless of the ideological leanings of the governments in power”, he said.

Sanchez’s office pointed out that Spain had a trade deficit with the US and that economic ties were forged by private companies rather than governments, adding that EU customs and trade rules prevented singling out member states.

Washington and Madrid jointly operate two key military bases in southern Spain for naval and air operations.

Asked whether Spain had contingency plans if the US reduced forces or assets at the bases, Spanish officials said they were unaware of any such moves and that investment in both facilities was growing.

Punishing Spain individually would be possible but challenging, Jennifer Hillman, an economic law expert and former member of the WTO’s Appellate Body, said in March. She said Trump would need to declare a national emergency and provide evidence that Spain constituted a threat to national security, foreign policy or the economy.

MAJOR US INVESTORS ENTHUSIASTIC ABOUT SPAIN

Despite Trump’s trade threats, major US investors have expressed enthusiasm about Spain as an investment destination.

BlackRock, the world’s largest asset manager, said in its mid-year report that Spain was its “preferred country for equity exposure” because of economic growth that has outpaced most developed countries.

BlackRock holds €104 billion ($119 billion) worth of Spanish equities, debt and other assets, and Spain is the US-based firm’s main bet at a global level for the next six months, a spokesperson said.

Still, net overall US investment in Spain fell by €1.9 billion in the first quarter, according to Spain’s Economy Ministry.

Spain is the world’s largest olive oil exporter and also sells auto parts, steel, chemicals and wine to the United States. However, analysts consider it far less exposed to US trade than its European peers.

Spain’s wine exports, already facing a tougher US market before Trump’s latest threat, fell by 4.3% in value and 2.6% in volume in 2025, according to Spain’s wine industry group OIVE, as cited by consultancy ERA Group.

($1 = 0.8763 euros)