The European Commission and Spain's socialist government on Wednesday dismissed US President Donald Trump's latest threat to impose higher tariffs on Madrid over its refusal to meet his proposed NATO target for defence spending.
Trump said he was "very unhappy" with Spain for being the only country to reject the new spending objective of five per cent of economic output, adding that he was mulling punishing the country. He had previously suggested making Spain "pay twice as much" in trade talks.
Trade policy falls under Brussels' remit and the commission would, "respond appropriately, as we always do, to any measures taken against one or more of our member states," commission spokesperson Olof Gill said in a press briefing.
The trade deal between the European Union and the United States signed in July was the right platform to address any issues, Gill added.
"The defence spending debate is not about increasing spending for the sake of increasing it, but about responding to real threats," Spain's Economy and Trade Ministry said in a statement. "We're doing our part to develop the necessary capabilities and contribute to the collective defence of our allies."
Spain has more than doubled nominal defence spending from a paltry base of 0.98 per cent of gross domestic product in 2017 to two per cent this year, equivalent to about 32.7 billion euros ($38 billion).
Defence Minister Margarita Robles said allies weren't discussing the five per cent target for 2035 in Wednesday's meeting because they were prioritising the present situation in Ukraine, but wouldn't completely rule out a shift in Spain's position.
Targeted tariffs by the US against individual EU member states are rare but there are precedents, Ignacio Garcia Bercero, a senior fellow at the Brussels-based economic think tank Bruegel, said.
In 1999, the US hit the EU with 100 per cent punitive tariffs on products such as chocolate, pork, onions and truffles in retaliation for an EU import ban on hormone-treated beef but excluded Britain, which at the time was still a member of the trade bloc.
The US could impose anti-dumping penalties on European products that are mostly produced in Spain, said Juan Carlos Martinez Lazaro, Professor at Madrid's IE business school.
In 2018, Washington imposed a combination of duties of more than 30 per cent on Spanish black table olives at the request of Californian olive growers. Spain's share of the US market plummeted from 49 per cent in 2017 to 19 per cent in 2024.
Another option would be moving the naval and air bases the US has in southern Spain to Morocco - an idea floated by former Trump official Robert Greenway - which would damage the local economies through the loss of thousands of indirect jobs.
(Reporting by David Latona, Charlie Devereux and Charlotte Van Campenhout; Additional reporting by Emma Pinedo and Romolo Tosiani; Editing by Sharon Singleton)