Spain balances with the US amid trade clash with China

Washington / MadridThe Spanish government is practicing tariff tightrope walking in the crossfire between the two trading giants: the United States and China. "It is open to the negotiations that began last week with the 90-day moratorium," Cuerpo said upon leaving the meeting, which he described as "frank and constructive."

a post-meeting statement, the US Treasury Department has stated that Cuerpo and Bessnet have had "frank discussions on issues related to trade between the United States and Spain." It also highlights that the secretary has conveyed to the Spanish minister "the need for increased defense spending for Spain in the context of NATO" and the "continued opposition" of the US to the "digital services tax implemented by Spain and other countries," the so-called Google rate.

The Minister of Economy, who did not address these issues in his assessment, reiterated the need to "sit down and negotiate" and highlighted Brussels' leadership in the negotiations. "We are aware that we must continue offering dialogue, and that is what Europe is doing, and that is what Spain is doing, supporting, without a doubt, the Commission's actions," the Spanish representative told the media. The meeting between the Spanish Economy Minister and Bessent comes the day after the European Commissioner for Trade, Maros Sefcovic, met for the third time with Commerce Secretary Howard Lutnick, and other members of the Trump administration.

The European representative's visit on Monday was the first since the easing of tariffs on European products, although it didn't end with any major developments. "The EU remains constructive and is prepared to reach a fair agreement, including reciprocity through our 0-for-0 tariff offer on industrial goods," Sefcovic assured. Asked how the Treasury Secretary views the current trade war, Cuerpo explained that his vision is of a "transitory situation and that by the end of the year this situation could be reversed in a positive way for the United States as well."

The meeting coincides with Donald Trump's partial tariff truce—which for 90 days will only apply 10% to European imports—and comes after Bessent criticized Spain for getting closer to China. During a meeting with bankers, the Treasury Secretary warned that getting closer to the Asian giant "would be like cutting one's own throat." The American spoke in the midst of the chaos unleashed by his president's announcement on reciprocal tariffs, in which the European Union had promised retaliation and various member countries were seeking trade alternatives in the US market. Before the meeting, the Spanish government had assured that the visit to Washington was part of the framework of "normality" and that it had already been scheduled before Sánchez's trip to China and Vietnam.

The same day Bessent sent the warning to Spain, Trump announced the partial tariff truce—because it applied a global 10% tariff—with the exception of China, for which it ended up increasing the tariff to 145%. The Trump administration's objective with the pause is to isolate Beijing. And Spain, and the EU, are navigating amid tensions between the two powers, which represent approximately 40% of global trade.

During the meeting with Xi JinpingSánchez responded to the US warning by insisting that "Spanish foreign policy is not against anyone, it is in defense of understanding between countries, the multilateral order, and free trade." Meanwhile, his Chinese counterpart argued that the EU should collaborate with the Asian giant to "jointly resist Trump's unilateral harassment."

The body has framed Spain's rapprochement with China within the European Union's "agenda" with the Asian country. "It is a clear agenda where, of course, we are aware that China is a rival, a competitor in many areas, but it must also be a strategic partner. We have to reach agreements that benefit both parties, both China and the European Union. There is ample room to do so," he stated. Although Brussels had sought to distance itself from China in recent years, the anti-Europeanism of the new US administration—both in trade and diplomatic matters—has caused the EU27 to view Beijing differently.

The Spanish delegation leaves Washington with a similar outcome to Sefcovic's. London, on the other hand, appears to be making more progress. On Tuesday morning, Vice President JD Vance asserted that there is "a chance" of reaching an agreement with the United Kingdom. A country that, according to Vance, Trump "loves."

Activation of ICO guarantees

In the midst of this tariff chaos, the Spanish government has taken a further step in terms of measures to protect affected companies. This Tuesday's Council of Ministers activated the first €1 billion of a total of €5 billion from one of the ICO's guarantee lines. Of these, €750 million will be allocated to liquidity for companies and €250 million to new investment projects. The ICO guarantees can be requested once financial institutions join and will be available until June 30, 2026.

Companies with exports and imports to the United States exceeding 5% of their turnover, as well as indirectly exposed companies (they are part of the value chain for an affected product), will be eligible to access the guarantees. The guarantee may cover up to 80% of the loan granted, and the repayment period will be up to ten years.