Spain and the European Union sharply dismissed President Donald Trump's newest threat to impose punitive tariffs over Madrid's refusal to meet the latest NATO 5% defense spending target.
The announcement set off fresh transatlantic tensions, drawing swift pledges of support from Brussels.
President Trump criticized Spain for being the sole NATO member to reject the spending hike, warning that "trade punishment through tariffs" was being considered.
Madrid's leaders countered, highlighting their significant recent increases in defense outlays and questioning the rationale behind such a policy shift.
What sparked Trump's warning to Spain?
Trump voiced frustration that Spain had opted out of the alliance's new defense outlay target. At the White House, Trump remarked that he was "very unhappy with Spain," specifically singling out Madrid for not meeting the 5% GDP spending goal agreed upon by other NATO members for 2035.
The president tied his warning directly to trade, suggesting that Spain might "pay twice as much" if it did not comply.
Spanish Prime Minister Pedro Sánchez responded that the 5% target was "unreasonable and counterproductive" because it would mean significant social spending cuts, a move his government would not accept.
He had succeeded in negotiating an exemption, drawing both applause at home and criticism from some corners of the alliance.
Did you know?
Spain nearly doubled its defense spending from 2017 to 2025, rising from 0.98% to 2% of GDP.
How did the EU respond to the tariff threat?
The European Commission acted quickly, pledging to shield Spain from any trade penalties. Commission spokesperson Olof Gill announced that the bloc would "respond appropriately, as we always do, to any measures taken against one or more of our member states."
EU leaders stressed that the July US-EU trade agreement includes mechanisms to resolve disputes without a trade war. Diplomats noted that Spain's situation was being treated as a test of EU solidarity.
Many in Brussels saw the US pressure campaign as an attempt to divide the European bloc over security funding policies, risking a secondary economic rift if tariffs were enacted.
What arguments did Spanish officials present?
Spanish Deputy Prime Minister Yolanda Diaz warned that penalizing Spain would “hurt American companies” due to Spain’s trade deficit with the US. She emphasized that imposing more tariffs would harm American exporters and not enhance allied security.
Diaz made it clear that "in Spain, the Spanish are in charge," firmly rejecting the idea of outside pressure on national budget decisions.
Foreign Minister José Manuel Albares reinforced Spain’s commitment to NATO, calling the country "a reliable ally" with troops deployed to the alliance's eastern front.
Albares told reporters in [translate: China] that "Spain’s commitment and all its contributions to Euro-Atlantic security are beyond question."
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How does Spain's defense spending compare with that of its allies?
Since 2017, Spain has more than doubled its nominal defense budget, increasing from 0.98% of GDP to 2%, or approximately € 32.7 billion, by 2025.
The recent figure matches the NATO-stated minimum, though it still lags behind some partners and is well below the controversial 5% target promoted by the Trump administration.
Critics point out that even at 2%, Spain’s military investment remains below alliance averages, and Washington continues to press members for higher outlays.
However, Spain’s government insists that setting spending without regard for broader economic conditions or domestic priorities makes little sense for its situation.
Could this dispute reshape EU-US relations?
Transatlantic experts say the dispute could further test cooperation, especially if tariffs are introduced and other EU members rally to Spain's defense.
European solidarity appeared strong in early responses, signaling Brussels’ readiness to push back against unilateral trade actions from Washington.
If left unresolved, the trade and security standoff could cloud upcoming negotiations on technology, energy, and military innovation partnerships.
Both blocs have much at stake, and many analysts hope backchannel diplomacy can de-escalate tensions for the benefit of wider Western unity.
Looking forward, Madrid and Brussels signaled readiness to defend their policy choices while keeping channels open for negotiation.
The NATO spending disagreement, although intense, may now become a key issue in defining the next phase of the EU-US alliance, an evolving partnership facing both internal and external pressures.
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