Spain’s leader sticks by decision to break with NATO spending goal despite Trump tariff threats
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Spain’s leader sticks by decision to break with Nato on defence spending
Pedro Sanchez walked away from this week’s Nato summit with an opt-out from spending more on defence as well as fresh threats of tariffs from US President Donald Trump. Mr Trump criticised the country after the summit, saying Spain wanted “a little bit of a free ride,” and that it would “have to pay it back to us on trade” through higher tariffs. Mr Sanchez responded to Mr Trump’s comments by pointing out that the European Commission — and not Spain — was who decided the bloc’s trade policy. He said that Spain will only spend up to 2.1% of its GDP on defence, which he called “sufficient and realistic”Spain was Nato’S lowest spender last year, spending around 1.28%.
On Thursday, the progressive Spanish leader stuck by his decision to break with Nato allies and responded to Mr Trump’s comments by pointing out that the European Commission — and not Spain — was who decided the bloc’s trade policy.
Spain’s Prime Minister Pedro Sanchez (Omar Havana/AP) (Omar Havana/AP)
“What is clear is that trade policy is a policy directed from here, from Brussels,” Mr Sanchez said. “Spain is an open country. It is a country that is friendly to its friends, and we consider the United States a friend of Spain.”
At the military alliance’s summit on Wednesday, members agreed to raise their defence spending to 5% of GDP. But Mr Sanchez secured a last-minute exemption, saying that Spain will only spend up to 2.1%, which he called “sufficient and realistic”.
Mr Trump criticised the country after the summit, saying Spain wanted “a little bit of a free ride,” and that it would “have to pay it back to us on trade” through higher tariffs.
How Mr Sanchez’s gamble could play out was up for debate on Thursday.
“It is not always easy to interpret exactly what Mr Trump means,” Belgian Prime Minister Bart De Wever told reporters at an EU summit.
“How he wants to impose import tariffs on Spain separately is a mystery to everyone. Could this perhaps concern specific products from Spain? We will have to wait and see.”
Spain’s move on the international stage comes at a complex moment for Mr Sanchez at home as corruption cases involving his inner circle have ensnared his Socialist party and resulted in louder calls — even from some left-wing allies — to announce early elections. So far, Mr Sanchez has refused.
“To Trump’s theatre, Mr Sanchez responds with something similar,” said Montserrat Nebrera, political analyst and professor of constitutional law at the International University of Catalonia. “Domestic problems are piling up, and this resistance to meeting the arbitrary 5% target also seeks to wink at his partners most critical of defence spending.”
Spain is Nato’s lowest spender, with just 1.28% of its GDP spent on defence (Omar Havana/AP) (Omar Havana/AP)
Spain was Nato’s lowest spender last year, according to the alliance’s estimates, spending around 1.28% of its GDP on defence expenditure.
In April, Mr Sanchez announced that the country would reach 2% this year, for which he was criticised by some left-wing allies.
On Thursday, Antonio Garamendi, president of the Spanish Confederation of Business Organisations, criticised Mr Sanchez for the spending opt-out.
“We have to stick with our allies and not going along with the other Europeans is an error, and even more so if that increases the chance we will be punished,” Mr Garamendi said.
While Spain is under the umbrella of the European Union, which negotiates trade deals on behalf of all 27 member countries, it could still be targeted by tariffs that hit its most vulnerable industries, Mr Garamendi said.
He specifically pointed to Spanish steel, cars and olive oil sectors.
“There are industries that can be impacted, and that has to concern us,” he added.
Trump tariffs live updates: Trump may extend tariff deadline, CEA chair Stephen Miran says
White House Council of Economic Advisers chairman Stephen Miran tells Yahoo Finance that he expects the tariff pause to be extended. Miran says he doesn’t see the aggregate tariff rate falling materially below the 10% level in the long run. From Canada to Japan, key trade deals are struggling to get over the finish line with just two weeks to go. The US economy is still figuring out the effects of the tariffs while the White House is making a push to get the “big, beautiful” tax bill passed.
“I mean, you don’t blow up a deal that’s that’s in process and making really good faith, sincere, authentic progress by dropping a tariff bomb in it,” Miran told Yahoo Finance’s Brian Sozzi.
In recent weeks, President Trump and administration officials have signaled a willingness to roll back the self-imposed tariff deadline of July 9 as pressure builds for talks to turn into pacts. From Canada to Japan, key trade deals are struggling to get over the finish line with just two weeks to go.
Trump and officials have warned that he could soon simply tell countries their tariff rates, raising questions about the status of negotiations. Miran said that he doesn’t see the aggregate tariff rate falling materially below the 10% level in the long run, but some countries may negotiate more favorable duties while others will see a return of the steeper “Liberation Day” tariffs.
So far, Trump has firmed up a trade deal with the United Kingdom. In Canada, Prime Minister Mark Carney’s government threatened to hike tariffs by late July on US imports of steel and aluminum, after Trump ballooned US levies on those metals. The countries are aiming for a deal by mid-July.
The European Union has also vowed to retaliate if the US sticks with its baseline 10% tariffs, according to a report in Bloomberg. Trump has threatened tariffs of up to 50% on EU imports.
One sticking point in negotiations has come from Trump’s disorganized approach to his tariff policies. According to Bloomberg, some countries have resisted signing deals without knowing whether Trump’s other duties — including those on metals, chips, and other materials — would still apply to them.
Meanwhile, the US economy is still figuring out the effects of the tariffs while the White House is simultaneously making a push to get the “big, beautiful” tax bill passed in the Senate. Fed Chair Jerome Powell this week reiterated that the central bank is still waiting to see the effects of the tariffs on prices before cutting interest rates.
Read more: What Trump’s tariffs mean for the economy and your wallet
Here are the latest updates as the policy reverberates around the world.
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Spain’s leader sticks by decision to break with NATO spending goal despite Trump tariff threats
Spanish Prime Minister Pedro Sánchez walked away from this week’s NATO summit with an opt-out from spending more on defense. He also left with fresh threats of tariffs from U.S. President Donald Trump. Spain was NATO’s lowest spender last year, according to the alliance’s estimates, spending around 1.28% of its GDP on defense expenditure. Spain is under the umbrella of the European Union, which negotiates trade deals on behalf of all 27 member countries, including the United States, Canada and the United Kingdom. The European Commission — and not Spain — was who decided the bloc’s trade policy, he said on Thursday. The move on the international stage comes at a complex moment for SánChez at home as corruption cases involving his inner circle have ensnared his Socialist party and resulted in louder calls — even from some leftwing allies — to announce early elections, he has refused.
Spain’s Prime Minister Pedro Sanchez speaks during a press conference after the plenary session at the NATO summit in The Hague, Netherlands, Wednesday, June 25, 2025. (AP Photo/Markus Schreiber)
Spain’s Prime Minister Pedro Sanchez speaks during a press conference after the plenary session at the NATO summit in The Hague, Netherlands, Wednesday, June 25, 2025. (AP Photo/Markus Schreiber)
Spain’s Prime Minister Pedro Sanchez speaks during a press conference after the plenary session at the NATO summit in The Hague, Netherlands, Wednesday, June 25, 2025. (AP Photo/Markus Schreiber)
Spain’s Prime Minister Pedro Sanchez speaks during a press conference after the plenary session at the NATO summit in The Hague, Netherlands, Wednesday, June 25, 2025. (AP Photo/Markus Schreiber)
MADRID — Spanish Prime Minister Pedro Sánchez walked away from this week’s NATO summit with an opt-out from spending more on defense. He also left with fresh threats of tariffs from U.S. President Donald Trump.
On Thursday, the progressive Spanish leader stuck by his decision to break with NATO allies and responded to Trump’s comments by pointing out that the European Commission — and not Spain — was who decided the bloc’s trade policy.
“What is clear is that trade policy is a policy directed from here, from Brussels,” Sánchez said. “Spain is an open country. It is a country that is friendly to its friends, and we consider the United States a friend of Spain.”
At the military alliance’s summit Wednesday, members agreed to raise their defense spending to 5% of GDP. But Sánchez secured a last-minute exemption, saying that Spain will only spend up to 2.1%, which he called “sufficient and realistic.”
Trump criticized Spain after the summit, saying the country wanted “a little bit of a free ride,” and that it would “have to pay it back to us on trade” through higher tariffs.
How Sánchez’s gamble could play out was up for debate on Thursday.
“It is not always easy to interpret exactly what Mr. Trump means,” Belgian Prime Minister Bart De Wever told reporters at an EU summit. “How he wants to impose import tariffs on Spain separately is a mystery to everyone. Could this perhaps concern specific products from Spain? We will have to wait and see.”
Spain’s move on the international stage comes at a complex moment for Sánchez at home as corruption cases involving his inner circle have ensnared his Socialist party and resulted in louder calls — even from some leftwing allies — to announce early elections. So far, Sánchez has refused.
“To Trump’s theatre, Sánchez responds with something similar,” said Montserrat Nebrera, political analyst and professor of constitutional law at the International University of Catalonia. “Domestic problems are piling up, and this resistance to meeting the arbitrary 5% target also seeks to wink at his partners most critical of defense spending.”
Spain was NATO’s lowest spender last year, according to the alliance’s estimates, spending around 1.28% of its GDP on defense expenditure. In April, Sánchez announced that the country would reach 2% this year, for which he was criticized by some leftwing allies.
On Thursday, Antonio Garamendi, president of the Spanish Confederation of Business Organizations, criticized Sánchez for the spending opt-out.
“We have to stick with with our allies and not going along with the other Europeans is an error, and even more so if that increases the chance we will be punished,” Garamendi said.
While Spain is under the umbrella of the European Union, which negotiates trade deals on behalf of all 27 member countries, it could still be targeted by tariffs that hit its most vulnerable industries, Garamendi said.
Spanish steel, cars and olive oil sectors are among the exposed products.
“There are industries that can be impacted, and that has to concern us,” he added.
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Wilson reported from Barcelona. AP journalist Lorne Cook contributed from Brussels.