Sánchez advocates for free trade from Vietnam: "Everyone loses in trade wars."

MadridIn full Trade escalation between the United States, China, and the European UnionPedro Sánchez is traveling to Beijing this week. It was a trip that had been in the works for months, but the current context of the tariff war makes it even more important. The Spanish Prime Minister is visiting Vietnam and China between Wednesday and Friday with the main objective of reducing the trade deficit that Spain suffers with both countries, especially at a time when the US market is facing obstacles after Donald Trump decided to break off the fight over the world order.

On his first stop in Hanoi, where he signed several bilateral agreements early this morning, Sánchez reiterated Spain and Vietnam's commitment to multilateralism and their shared position against the US president's tariffs. "We are firm defenders of free trade to achieve the development and prosperity of our people," he emphasized. "No one is interested in a trade war. No one wins in trade wars [...] We all lose, and above all the workers and the middle class," he added, alongside his Vietnamese counterpart, Pham Minh Chinh.

In an informal conversation with journalists accompanying him on the trip from Spain, Sánchez had already pointed out that the US president had made a mistake and was at risk of high inflation, although he added that he did not believe there could be a recession in Spain, Efe reports. This is the first time in a democracy that the Spanish president has made an official trip to Vietnam, and the Moncloa authorities have highlighted the diplomatic weight this country is acquiring: it is the only one that has managed to host visits from Joe Biden, Xi Jinping, and Vladimir Putin.

The highlight of the trip, however, will be China. "It is not a trip against anyone, but it is a trip in favor of improving trade. We do not see it in terms of substitution. We see it in terms of diversifying, reducing dependence, in a context in which trade has the capacity to create wealth, jobs, and significant income," summarize sources from the Moncloa authorities. It is not, therefore, a question of replacing the United States with China, but rather of deepening political dialogue and the European Union's strategy of opening markets.

Since 2019, China has been "a partner, a competitor, and a systemic rival" for Brussels—the definition is faithful to the ambiguity that characterizes international relations—and it is time to strengthen the partner aspect. Along these lines, the EU aims to ratify the Mercosur trade agreement and also open up to India. This is Sánchez's third visit to leader Xi Jinping, with whom he has established a good political relationship. The last visits were in March 2023 and September 2024, coinciding with the 50th anniversary of the establishment of diplomatic relations between the two countries.

The head of the executive branch seeks reciprocity in investments with the Asian giant: Chinese companies have penetrated Spain—and especially Catalonia—in the electric car sector, despite EU tariffsSánchez will meet with some of them in Beijing, including Chery, Leapmotor, and Catl. For their part, Spanish companies face more obstacles to establishing themselves there, such as the pork meat sector and the pharmaceutical and cosmetics sectors. One of the main challenges of the trip is to ease these barriers.

A "huge" trade imbalance

The trade imbalance with China is "enormous," the Spanish government admits. In fact, it represents 70% of the state's trade deficit. Imports amount to €45 billion, while exports amount to €7.4 billion. The same logic applies in Vietnam. The objective in this country characterized by its low-cost export economy—among others, in the United States—is to try to penetrate a niche little explored by Spanish companies. Barely €530 million of Spanish products are exported to Vietnam, while imports are valued at €5.2 billion. This is small for a country of 100 million people.

Trump's about-face has had a severe impact on the country: it is the first time they have faced off on trade fifty years after the end of the war, with tariffs of 46%, the third highest. Vietnam depends on exports to the United States for 30% of its GDP, especially in the textile sector, and could now see the growth it has experienced in recent years slowed. Unlike China, Vietnam has opted to try to negotiate with Trump. The Spanish government sees great opportunities in the railway, renewable energy, and water sectors and seeks to eliminate investment barriers in this area. Therefore, among the companies traveling to Vietnam are Renfe, Adif, Talgo, and Indra.