U.S. President Donald Trump announced on Tuesday that the United States would cut off all trade with Spain after the Spanish government refused to allow U.S. military use of its bases for missions related to strikes on Iran [1]. Trump criticized Spain's actions, stating, 'Spain has been terrible,' and indicated he had instructed Treasury Secretary Scott Bessent to 'cut off all dealings' with Spain [1]. Trump further emphasized Spain's refusal to meet U.S. demands for NATO members to spend 5% of their GDP on defense, asserting, 'Spain has absolutely nothing that we need. All business having to do with Spain, I have the right to stop it. Embargoes - do anything I want with it - and we may do that with Spain' [1].
Following Trump's remarks, Bessent said he would direct the United States Trade Representative and the Department of Commerce to begin investigations into potential penalties for Spain [1]. Although the Supreme Court recently struck down Trump's ability to use the International Emergency Economic Powers Act (IEEPA) for broad global tariffs, Trump claimed the decision 'totally reaffirmed' his authority to impose a full trade embargo under the law [1]. Bessent confirmed, 'The Supreme Court reaffirmed your ability to implement an embargo,' referencing the IEEPA's history of being used for sanctions against countries like Iran, Russia, and North Korea [1].
The Spanish government responded by urging the U.S. to respect the autonomy of private businesses, international law, and bilateral trade agreements with the European Union [1]. Madrid stated it had resources to contain the potential impact of a trade embargo and support affected sectors, while continuing to advocate for free trade and economic cooperation [1]. Spain is noted as the world's top exporter of olive oil and also exports auto parts, steel, and chemicals to the U.S., but is considered less vulnerable to U.S. economic threats than other European nations [1].
According to U.S. Census Bureau data, the U.S. had a trade surplus with Spain for the fourth consecutive year in 2025, totaling $4.8 billion, with U.S. exports at $26.1 billion and imports at $21.3 billion [1].
CONCLUSION
President Trump's threat to cut off all trade with Spain over military base access and defense spending marks a significant escalation in U.S.-Spain relations, with immediate investigations into penalties underway. The Spanish government has signaled preparedness to mitigate the impact and maintain economic cooperation. Given the size of bilateral trade and the potential for embargo, the market impact is likely to be high.