The Spanish government is stuck with the PP over tariff aid.

MadridThis Tuesday, the Council of Ministers approved a decree with some of the measures Pedro Sánchez announced to mitigate the economic impact of Donald Trump's tariff policy on businesses and workers. Although the European Union is doing its part to reach an agreement with the United States that would provide a solution to the trade war, the State, with the aim of sending a message of reassurance to the most affected sectors, has already promised the mobilization of up to 14.1 billion eurosSome are budget items previously announced, such as the Moves III Plan, while others are being reoriented or approved anew. Of the money announced, today's Council of Ministers activated 7.72 billion.

"We are facing one of the most serious trade shocks," lamented Economy Minister Carlos Cuerpo in a press conference on Tuesday. Although the central government is cautious when quantifying the impact, Cuerpo has anticipated that 80% of Spanish exports to the United States (approximately €18.6 billion annually) could be affected by the tariffs announced by Donald Trump, in addition to those already in effect.

Understanding with the PP?

Given this scenario, the Spanish government has moved to ensure that the approved decree is not jeopardized in the Congress of Deputies, where each vote has become a headache due to parliamentary fragmentation. To begin with, the Spanish government has sought out the PP (People's Party) to provide a "state response," which would mean leaving behind, after a long period of time, the usual confrontation that underlies their relationship. Although the PP's economic chief, Juan Bravo, and the Minister of Economy have been negotiating until Monday night, an agreement is not currently on the table, but it is not ruled out either.

While the Spanish government has accepted some of the PP's proposals to address the tariff clash, such as taking into account the autonomous communities (most of which are governed by the PP) when coordinating the package of measures, Alberto Núñez Feijóo's party considers it "insufficient." "The decree has not been modified in the areas we consider most important, which are competitiveness, taxation, or the fund with the collection of tariffs," PP sources point out. "We hope that the willingness to engage in dialogue will lead not only to ratification [of the decree], but also to the joint construction of a response. We hope that the vote of the PP and the other parties will be adopted this way. We are engaged in constructive dialogue," Cuerpo insisted in a press conference. The PP is confident that Pedro Sánchez's administration will take further steps in the coming days.

Waiting for the partners

The PP's path has been thwarted by the triumphalism of Junts, which has claimed that 25% of the mobilized aid will go to Catalan companies. This is estimated to be the case because Catalonia's export weight in the United States will be taken into account when distributing the funds for this initial shock plan, and Catalonia accounts for 25%, noted Junts member of Parliament Josep Maria Cruset. Furthermore, the members of the judiciary obtained a commitment from the PP to appear in Congress every three months.

Although Junts has estimated that this would mean mobilizing "3 billion euros" for Catalonia alone, sources from the Ministry of Economy clarify that the plan is to add as an "essential" criterion the exposure of each territory in terms of exports to the US. The same sources recall that, for example, measures such as ICO guarantees are distributed based on business demand and not by territorial quotas. The same sources do not rule out expanding coverage if it is higher. "If there are companies that are more exposed or that request more guarantees, they will benefit more," the same sources indicate.

The PP has denounced that the Spanish government has agreed to a "tariff quota with the separatists" and has warned the PSOE not to count on its support to "whitewash an agreement that auctions off the State." Sources from the Moncloa believe that the conservatives are beginning to prepare the narrative to vote against the royal decree, but they do not fear its approval because they trust the investiture partners. This would mean having the four votes of Podemos, which described the measures as "insufficient."

Approved Measures

Among the approved measures is a €5 billion ICO guarantee facility to facilitate access to financing for companies whose activity is reduced due to tariffs, so they can maintain it and their workforce.

The government has also activated two proposals to help affected sectors reconvert their activity and find new markets. Specifically, it approved a €720 million allocation in financial instruments to help companies internationalize, and a second €2 billion allocation in credit insurance and export risk coverage. Specifically, Pedro Sánchez is traveling to China this Tuesday to try to strengthen trade ties with the Asian country, but also to try to tone down Beijing's response to Donald Trump's tariffs.

Finally, the central government has also negotiated with the PP to incorporate the accounting moratorium for companies this 2025. This measure, which was already foreseen in the omnibus decree last December, which derailed, allows companies not to incorporate the losses they suffered during 2020 and 2010 into their accounts.

This Tuesday's decree must be ratified by the Congress of Deputies and, if it does not have the support of the PP, Pedro Sánchez will need the votes of the usual partners. In fact, the Spanish government has its first test this Thursday with the vote on the Moves III Plan, endowed with 400 million euros in aid to the electric car sector, one of the most affected by tariffs.