Catalonia, awaiting the domino effect of tariffs

BarcelonaHetrade agreement between Brussels and Washington The imposition of a general 15% tariff on European exports to the United States has reduced uncertainty among the business sectors most exposed to the US market. However, this uncertainty has not disappeared, as the greatest impact of the new trade framework will come from the secondary effects on other markets with which Catalonia has closer ties—Germany, France, and Italy—and, even more so, from a hypothetical definitive trade pact between China and the US.

In fact, the immediate impact of the tariffs is not what most concerns exporters and economists. "Catalonia has limited direct exposure to the US," Reyner asserts. Specifically, Catalan companies exported goods to the US last year worth €4.351 billion, 4.3% of their total worldwide exports. For comparison, this figure is less than a third of what Catalonia sells to France and less than half of what it exports to Germany. Despite being the world's largest economy, the US is the sixth-largest destination for Catalan products, surpassed not only by the two aforementioned European partners, but also by Italy, Portugal, and the United Kingdom.

In other words, an increase in tariffs will undoubtedly have a negative effect on the Catalan economy (and could directly harm some sectors that depend on exports to the US), but nowhere near as significant as in other parts of the European Union. The best-known example is Germany, which is heavily dependent on the foreign sector in general and, more specifically, on access to the United States and China for the sale of high-value-added industrial goods, from medicines and chemicals to household appliances and high-end cars. Italy, where the northern part of the country's industry is also highly competitive abroad, also has a high exposure to the US market.

Despite the bad news of not being able to reach an agreement with better terms, the full scope of the tariffs remains to be seen. The new agreement was supposed to go into effect this Friday, but Trump has postponed it until next Thursday, August 7. It is also unclear what legal status the text will have, a key fact: if it were a trade agreement, it would have to receive the approval of a majority of the 27 EU member states and the European Parliament, something that is not guaranteed considering the avalanche of criticism he received from within Europe European Commission President Ursula von der Leyen, the day after announcing the agreement with Washington.

However, the fact that there is now an agreement, however unclear it may be, represents a step forward in the trade war started by Trump. "It can't be finalized; the domino effect hasn't ended yet, but we've taken a step toward certainty," Mas asserts.

Doubts about the agreement

The agreement between the EU and the US places the 15% tariffs in a mid-range position compared to other advanced economies. The United Kingdom has obtained a 10% tariff, while Japan will also retain 15%. In contrast, countries such as Indonesia and Vietnam have received higher tariffs, 19% and 20%, respectively. In this context, industry sources point out that 15% may even represent a competitive advantage for some sectors against competitors in Asia, where for the moment most countries are closing definitive or provisional agreements with even higher tariffs.

"The Atlantic axis has been broken, the EU has woken up," as "it believed it would be together with the United States forever," says Ferrer. With the breakdown of relations between Washington and European countries—and other geopolitical factors, such as the Russian invasion of Ukraine or the conflicts in the Middle East—a period of "uncertainty" has begun in trade, energy, and defense matters, leaving the EU in a position of "weakness" and, therefore, with little.

Brussels "has no capacity to force anyone; there's no choice but to accept the lesser evil," says Ferrer, since 15% is better than the 30% he had threatened the US president with and "would have been very negative for Europe." "It would have greatly harmed German industry, and if Germany doesn't pull off a comeback, Europe will suffer. Von der Leyen's submission, which is even criticized by EU states, is highly questionable," he says.

With Trump in the White House until January 2029—assuming he doesn't bend the US Constitution and try to run for a third term or cancel the elections, two things he had threatened to do—the prospects for European companies' access to the US improving are almost nonexistent. "What the EU and Catalonia should do is open new markets," says Ferrer. "A trade line like Mercosur is opening up, which can be approved in four or five months" and is a "market of 300 million citizens," he recalls, referring to the trade agreement signed between the EU and the South American countries.

A blow to the automotive, chemical, and food industries.

"The most affected sector is the automotive sector," explains Mas. This impact is direct but above all indirect. The indirect effect is that Catalonia barely exports vehicles to the US, but it does export car components. And the direct effects are threefold: first, the companies in the sector that are suppliers to the major European manufacturers (mainly German) that export to the US. Second, the companies themselves, but which export components to Canada and Mexico. And third, the Catalan companies in the automotive sector that directly have production plants in these two American countries.

In fact, the impact felt by many European companies that have set up shop in these two countries over the last three decades, taking advantage of the free trade agreements they had with the United States, will also depend largely on what tariffs Washington ends up imposing on its northern and southern neighbors.

The chemical industry will also be hit hard by tariffs, although their scope is also unclear. The sector is one of the largest exporters to the United States, but it may find—like other sectors—that Trump's strategy of imposing tariffs to relocate industries to the United States ends up working. "If we export chemical products, it's because they have a competitive price," explains Mas, who points out that "if there are no US companies that manufacture this product, it means they don't have a cost structure that allows them to produce it at a low cost." However, the tariffs may make it impossible for US chemical companies to take on production, as the price bar rises and the cost is passed on to the consumer.

Among the other sectors affected by the agreement there is the wine and olive oil. "They export a lot to the US, but the tariffs Trump will impose on other parts of the world that compete with these products will also be affected," say industry sources. For example, in the case of olive oil, Turkey is one of the countries that exports a lot to the US and has also announced a general tariff of 15%. "Oils and wines have already seen their exports to the US substantially during the first five months," Mas recalls. In 2024, up to May, Catalonia exported €594 million worth of olive oil, and this year, up to May, we have exported €472 million.

The China effect

The other major point of uncertainty in the trade puzzle caused by Trump's policies is what the final agreement will be (if they can sign it at all) between China and the United States. The Asian giant, the world's second-largest economy, is the main exporter to the US, but the dependence is mutual: a good part of the consumer goods sold in the US come from China, especially clothing and electronics.

The point to keep in mind if the agreement finally includes a very high tariff is that Chinese companies, as well as other Asian countries, will also have to look for alternatives, and the most succulent is to try to export even more to the EU, a market of 500 million inhabitants with very high purchasing power. Also in this regard, "the big concern is the automobile sector," says Mas, since Chinese cars that don't go to the US "will come to Europe." In fact, despite criticism of Trump's tariffs, the EU has been declining for a year. imposes its own taxes on Chinese electric vehicles (up to 35.3%), which he accuses of receiving government aid to compete with European manufacturers.