Trump orders halt to US trade with Spain over NATO spending, Iran
Trump has also repeatedly expressed frustration with Spain after Prime Minister Pedro Sanchez, a Socialist who leads a minority leftist government, refused to let the US use its airspace or bases for the Iran war.
Highlights
- Trump previously made similar threat in March, but US-Spain trade continued normally
- Spain says EU customs rules bar singling out individual member states
- PM Sanchez's office says it's treating Trump statement as business as usual
- Major US investors enthusiastic about Spain
US President Donald Trump on Wednesday (8 July) 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 instead reignited the dispute with Spain, calling it a "terrible partner". He also irked another NATO ally Denmark by reiterating that his country should control Greenland. Denmark promised to defend every inch of its territory.
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This marked 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 later tried to soothe the tension by saying that Spain "made a huge step last year" raising its spending to 2%, though he added that "there are still issues we have to solve".
Trump has also repeatedly expressed frustration with Spain after Prime Minister Pedro 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, "Take it immediately. 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."
Sanchez's office said in a statement it was treating Trump's statements as "business as usual" and did not intend to change the "excellent" relations it enjoyed with Washington.
It 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 as part of the customs and trade union, individual EU members could not be singled out.
Washington jointly operates with Madrid two key military bases in southern Spain for naval and air operations.
Asked whether Spain has contingency plans in case the U.S reduces forces or assets at the bases, Spanish officials this week said there was no indication that such a plan was underway, with investment in both bases growing.
Punishing Spain individually would be possible but difficult, Jennifer Hillman, 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 US 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.
Spain is the US-based firm's main bet at a global level for the next six months, a spokesperson said. BlackRock holds €104 billion ($119 billion) worth of Spanish equities, debt, private markets and real assets, they added.
Still, net overall US investment in Spain slumped by €1.9 billion in the first quarter of 2026, 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, although analysts consider it to be less vulnerable to Trump's threats of economic reprisal than other European economies.
Spain's wine sector was already facing a tougher US market before Trump's latest threats. Spanish wine exports fell by 4.3% in value and 2.6% in volume in 2025, according to Spain's wine industry group OIVE cited by consultancy ERA Group.
