The Generalitat allocates €1.5 billion to aid against the impact of tariffs

BarcelonaThe Generalitat of Catalonia has announced the mobilization of 1.5 billion euros to aid the economic sectors most affected by the new US tariffs on European imports, the majority in the form of loans and guarantees, although some also in the form of direct subsidies. The president of the Generalitat presented the plan to employers, unions, and chambers of commerce on Monday.

The objective of what the Government has dubbed a "defense plan" is to "protect the resilience of Catalonia's business and agricultural fabric and the jobs it generates" in the face of the trade war initiated by US President Donald Trump, according to the Generalitat in a statement. Furthermore, the Catalan government also wants to "relaunch Catalan companies by promoting their internationalization and positioning in global markets."

Last week, Trump announced an increase in customs duties to most of the US's trading partners. In the case of the European Union, the tariff that US importers who buy goods manufactured in the EU will have to pay will be 20%, meaning that these European products will become 20% more expensive in the US market.

This new 20% surcharge equally affects all Catalan exports to the US, which amount to approximately €4.351 billion, according to data from the Generalitat (Catalan Government). In total, 3,161 Catalan companies export to the US. The most affected sectors are the chemical and pharmaceutical industries, machinery manufacturers, the agri-food sector, and metallurgy.

The president of the Generalitat (Catalan Government), Salvador Illa, met with social stakeholders to present the aid package. "Everything we don't do today, we will pay for tomorrow," said Illa to justify the swift reaction of the government he presides over.

After the meeting with Isla, economic stakeholders expressed satisfaction with the plan. "Now we have no choice but to get our act together to avoid a recession. We have a window of opportunity," declared the president of Foment del Treball, Josep Sánchez Llibre, who called for "reindustrializing Europe." For his part, the president of Pimec, Antoni Cañete, welcomed the "speed" of the government's action, but noted that a large part of the aid is in the form of loans.

The unions have received the support package with greater skepticism. "Many of the measures being proposed are part of the government's strategy, such as reindustrialization," said Javier Pacheco, general secretary of the Workers' Commissions in Catalonia, after the meeting. In his opinion, the plan does not present "concrete measures" but rather gives "dynamics to the government's structural policy," he added. Along similar lines, Camil Ros, general secretary of the UGT (Catalan Workers' Union), asserted that the tariff escalation highlights the "need" to reopen negotiations to approve a budget, because the measures announced by the government are "redirected" from existing items.

Subsidies, credits, and foreign promotion

The Generalitat's aid plan will consist of several components, according to the plan presented to social stakeholders. On the one hand, the majority of the funds, approximately 900 million euros, will be lines of credit, guarantees, and interest rate subsidies of up to 1.5% from the Catalan Institute of Finance (ICF, the Generalitat's financial institution) for affected companies.

In addition, the Catalan government will allocate €300 million to non-repayable aid, primarily for the agri-food sector, international promotion, and multi-location, that is, to expand the presence of Catalan companies abroad by opening subsidiaries. A significant portion of this money will also be allocated to subsidies for investments classified as "high impact," that is, investments that generate "a minimum of new jobs" or "a minimum productive investment," although the exact details are not yet known.

The ICF, together with Avançsa—the Catalan public company that holds business holdings, primarily industrial ones—will also allocate another €150 million to investment and capitalization funds. In addition, an additional 130 million euros will be allocated to advisory services "to boost the internationalization and market diversification of Catalan companies," with plans to adapt to the new situation in the US, "public-private programs to launch companies into exports," and a reorientation of the network of offices of Acción, the promotion agency.

Finally, the Government's program reserves 20 million euros for "communication campaigns to promote Catalan products in strategic markets."

"Reorientation" of budgeted funds

Sources from the Catalan government's Department of Economy have explained to ARA that "the bulk of the plan is being financed with existing resources." Thus, only about €200 million will be redirected from the Catalunya Lidera plan to the defense plan presented this Monday, and another €100 million will come from a credit extension (budget increase) that must be approved by Parliament.

The remaining funds will be "redirected," meaning that existing programs—for example, ACCIÓ advisory lines or ICF credit lines—will focus on helping companies affected by the tariffs. "The idea is that resources already allocated to the affected areas will be allocated to very specific purposes to specifically help the sectors most affected by this crisis," the same sources from Economy assure.