The outbreak of the global trade war unleashed by Donald Trump to "make America great again" was already a reality with China, has now extended from today to its neighbors Mexico and Canada, and threatens to soon reach the European Union, which, as the US president stated at the Davos forum (Switzerland), has mistreated his country.
Once the tariff escalation is discounted, it remains to be seen to what extent and which sectors it will affect. For weeks, economists and investment banks have been warning that potential targets in Spain for a tariff increase will likely be related to industrial activities or agricultural products. Madrid, Catalonia, Valencia, the Basque Country, and Andalusia are the regions that currently benefit the most from trade with the United States and are also where an escalation in import tariffs in the United States could cause the most damage.
The list of potentially affected products could range from car parts and components crossing the Atlantic to wine, olive oil, table olives, and even medications. These may not necessarily be direct exports. For example, if a barrier is raised against the import of cars manufactured in Mexico, as has happened, the volume of parts exported to Mexican factories will decrease. The same applies to components produced in Navarra, Aragon, or Catalonia for Germany. And this impact is not limited to the automotive industry. The manufacturing of wind turbines in these regions or in Castilla y León, which was already facing a challenging situation due to the competition from much cheaper Chinese products before this escalation, would also be affected. Lastly, there are secondary effects such as an increase in exports to the EU of products that were originally destined for the United States and are now seeking new markets.
Economists warn that other European neighbors, especially France or Germany, may have a harder time as the volume of Spanish exports to the US is approximately half of the EU average. Germany and Italy, which are considered more protected thanks to the alignment shown by Prime Minister Georgia Meloni, lead the market.
In a way, the fact that the weight of services and specifically tourism is so high in Spanish exports is an advantage. In fact, the strengthening of the US dollar is beneficial for airlines and hotel chains in Spain, delighted to offer flights and stays on the peninsula at more competitive prices. For example, Balearic Islands has already seen United Airlines increase its offer between New York and Palma by 50% this year.
In any case, it will be necessary to wait and see how the threats of tariff increases materialize: whether they are generalized or focused on specific products. The new US trade policy is unfolding like a shootout, and a stray bullet can hit a specific activity within a sector more than the sector as a whole. In this sense, a 10% tariff applied to all food is different from a 25% tariff on specific products, as happened in 2019. In that initial wave of tariffs, Trump punished regions like La Rioja or Andalusia by penalizing wine and olive oil due to the conflict over European aid to Airbus.
Chambers of Commerce stated in early January that this experience left a mark. "Spanish companies are aware of their vulnerability and have been preparing by diversifying markets, negotiating with trading partners, and strengthening their supply chains," explains the Spanish Chamber of Commerce in a report.