President Donald Trump on Wednesday ordered an immediate halt to all US trade with Spain, escalating a bitter feud over defense spending and Madrid’s refusal to support the American led war in Iran, even as European Union rules require trade negotiations to be conducted as a single bloc. The directive, issued during a NATO summit in Ankara that European leaders had hoped would mend transatlantic rifts, came after Trump called Spain a “terrible partner” and “wasted cause” for being the sole NATO member to reject the alliance’s new 5% of GDP defense spending target. Treasury Secretary Scott Bessent, whom Trump addressed directly during the public exchange, replied “Yes, sir” to the order, while a US official later said the Treasury and Commerce departments would prepare “a menu of Spanish products that may be embargoed in the coming days.”
The confrontation is the second time Trump has threatened to cut trade with Spain over its defense posture, following a similar declaration in March that failed to materialize. Spain’s resistance to the 5% target, formally secured as an exemption at the 2025 Hague summit, stems from Prime Minister Pedro Sánchez’s argument that such spending would be “disproportionate and unnecessary” and incompatible with maintaining the country’s welfare state. Sánchez has instead capped defense spending at 2.1% of GDP, noting that Spain ranks seventh among NATO members in military capabilities, third in peacekeeping troop deployments, and leads contributions to the alliance’s eastern flank. The dispute deepened dramatically in March when Spain barred US aircraft involved in the Iran war from using its airspace and denied access to the jointly operated Morón air base and Rota naval base in southern Andalusia, a move Defense Minister Margarita Robles defended as necessary because the conflict was “profoundly illegal and unjust” and lacked UN, NATO, or EU authorization.
Despite the heated rhetoric, Spanish officials sought to downplay the rift. Sánchez described his conversation with Trump as “very cordial,” saying they discussed the upcoming soccer World Cup and golf rather than military spending, and he announced a fresh deployment of Spanish troops to Finland for NATO’s Arctic Sentry mission to demonstrate reliability. Spain’s economy ministry noted that the country actually runs a trade deficit with the US and that economic ties are forged by private companies rather than governments, while EU customs rules prevent singling out member states for trade punishment. Legal experts say Trump would likely need to invoke the International Emergency Economic Powers Act and demonstrate that Spain constitutes a national security threat to impose a lawful embargo. The practical impact of Trump’s order remains uncertain given the legal barriers and the fact that US-Spain trade continued normally after his March threat.
The economic backdrop adds complexity to Trump’s gambit. Spain has emerged as a standout performer in Europe, with economic growth outpacing most developed countries and attracting major US investment. BlackRock, the world’s largest asset manager, declared Spain its “preferred country for equity exposure” in its mid year 2026 report, holding €104 billion in Spanish equities, debt, and other assets. However, net overall US investment in Spain fell by €1.9 billion in the first quarter, and Spanish wine exports to the US already declined by 4.3% in value in 2025 amid trade tensions. Spain is the world’s largest olive oil exporter and also sells significant quantities of auto parts, steel, chemicals, and wine to the American market, though analysts consider it less exposed to US trade than many European peers. With NATO Secretary General Mark Rutte attempting to soothe tensions by acknowledging Spain’s progress toward the 2% benchmark while admitting “there are still issues we have to solve,” the episode underscores the fragility of transatlantic unity at a moment when the alliance is attempting to project cohesion amid the escalating Iran crisis.
