The trade war unleashed by Donald Trump against all his trading partners, including Spain, could potentially affect around 480,000 jobs in our country, directly related to exports to the United States, as calculated by the team of economists at CaixaBank Research, the first to quantify the potential impact of the trade battle on the domestic labor market in the worst-case scenario.
"The impact of trade tensions on domestic employment can be significant: 25.3% of employment in Spain depends on foreign final demand, including tourism. While only 2.2% of employment would be linked to US final demand, this percentage is relatively higher than the exposure by value added (1.3%)," they warn in their Sectoral Observatory published on Friday.
This 2.2% would be equivalent to 478,838 employed individuals, according to the latest Active Population Survey data, representing the percentage of workers in the country whose activity is linked to the volume of imports that the US makes from Spain. Tariffs will increase the cost of Spanish products, which could lead to a decrease in demand, affecting employment.
Compared to other countries, Spain will not be among the most affected, as the share that the US represents of our total foreign sales is not very high. In fact, experts estimate that "in other countries like Germany or Italy, 3.3% of domestic employment depends on US final demand." Within our country, however, the impact would be higher in sectors more exposed to sales to the US, such as extractive industries, manufacturing, and agriculture.
Among the sectors with the highest percentage of value added generated in Spain, depending on global exports to the US, "some branches of the manufacturing industry stand out, such as the pharmaceutical sector (8.3% of the sector's value added has the US as the final destination), metallurgy (6.1%), construction auxiliary industry (6.0%), chemicals (5.5%), and machinery and equipment manufacturing (4.9%). The extractive industry also shows significant exposure (3.0%). In contrast, agriculture has a relatively low exposure to the US as a whole (2.4% of the sector's value added), although some products are more exposed, such as olive oil, wine, and some preserved legumes and vegetables."
To date, no one had outlined a calculation of the number of people in Spain whose jobs are directly linked to exports to the US, but the Government had pointed out that any protective measure against the trade war will be linked to companies not laying off employees.
Job protection has been a condition for the public aid deployed by the Government in recent years during cyclical crises. The pandemic served as a testing ground for the deployment of social, economic, and labor shields that later helped protect thousands of jobs in situations like the one experienced in La Palma after the volcano eruption or more recently in the Valencian Community with the Dana. And this time, the same philosophy will be followed.
The Second Vice President and Minister of Labor, Yolanda Díaz, has warned that the support network to protect companies from Trump's tariffs will not be unconditional, insisting on the prohibition of layoffs when receiving public funds and reminding entrepreneurs that they have tools available for temporary job protection such as ERTEs or the RED mechanism introduced by labor reform for sectors in crisis. She has even gone further, banning companies from receiving public aid if they relocate their production during these uncertain times.
These two conditions - job retention and ban on relocations - are indeed included in the aid activated so far in the first decree, mainly based on guarantees and credits. The Ministry of Economy indicates that "they will be taken into account if new actions are necessary." This was agreed upon by Carlos Cuerpo with ERC in a recent agreement in which the Government committed to conditioning all public aid due to tariffs, including the potential activation of a sectoral RED mechanism, to preserving jobs and not using the money to relocate production centers.
The unions will remain vigilant to ensure that these conditions are met. Although they currently do not have specific information on the impact, given the high uncertainty surrounding the economic policy of the US administration, the research services of CCOO and UGT agree that the automotive industry, olive oil, or sectors exporting energy products, chemicals, or equipment goods are among the most affected, without ruling out other impacts on food or pharmaceutical products if Trump follows through on his threats regarding other primary sector goods and certain industries. CCOO (workers commission) state that they have requested information from the Government on the potential effects of tariffs on employment, but have not received a response to date.