Trump threatens Spain over NATO spending, risking EU trade clash

Trump ordered Treasury Secretary Scott Bessent to cut off all trade with Spain during the NATO summit in Ankara, putting a direct trade threat against a U.S. ally that is shielded by European Union rules. The move came after Spain refused to endorse NATO’s new 5 percent-of-GDP defense target, leaving Madrid as the only alliance member to reject the goal.

NATO allies agreed in June 2025 to lift defense spending to 5 percent of GDP by 2035, with 3.5 percent for core military needs and 1.5 percent for related security areas. Spain will instead aim for 2.1 percent. Pedro Sánchez argued in June 2025 that Spain could meet NATO capability goals without matching the headline number and said Spain would continue to be a key player in the alliance without compromising its social model or strategic autonomy. Trump’s threat also came amid tensions over Spain’s position on the Iran conflict.

The legal path for a U.S. move aimed only at Spain is narrow. EU trade policy is an exclusive competence of the bloc under Article 207 of the Treaty on the Functioning of the European Union, and the European Commission handles trade on behalf of member states. That means Washington cannot simply treat Spain as a standalone trade partner for punishment or negotiation. A unilateral U.S. strike at Spain would quickly collide with Brussels’ authority and could trigger an EU-wide response, especially after the July 2025 U.S.-EU trade deal meant to provide stability and predictability.

U.S. goods trade with Spain totaled about $18.5 billion in the first five months of 2026, including $10.25 billion in U.S. exports and $8.24 billion in imports from Spain, leaving the United States with a goods surplus of about $2.0 billion. Spain’s central bank puts the United States as the sixth-largest market for Spanish goods exports, and Spain’s exposure to the U.S. is lower than the euro area overall, with bilateral commerce more services-heavy than the wider eurozone.

In April 2025, Sánchez announced a €10.5 billion increase in defense spending to help reach NATO’s 2 percent target, lifting the annual defense budget to about €34 billion. NATO data had placed Spain among the alliance’s lowest spenders at roughly 1.3 percent of GDP before that increase. Spain’s 2024 exports still exceeded €384.465 billion, its second-best annual total on record.