Olive oil, wine, and food manufacturers fear losses from tariffs agreed with the United States.
The European Union has played the best it could with a bad poker hand. That's how some analysts defined the trade agreement reached between Brussels and US President Donald Trump, and that's how the Spanish government seems to have accepted it. "I support it, but without any enthusiasm," Prime Minister Pedro Sánchez succinctly stated during a press conference at Moncloa Palace yesterday.
The US threat to increase tariffs on European goods to 30% had put the sectors most exposed to that market, such as the German automotive, pharmaceutical, and agri-food industries, on the ropes. Now, the preliminary agreement on tariffs of 15% for European Union products and 0% for North American products closes the trade war that had kept states and companies on edge. However, judging by the reaction of the Spanish Prime Minister, it leaves a sour taste in the mouth and hurts pride by unveiling the power relations on both sides of the Atlantic.
Sánchez didn't want to criticize the pact led by European Commission President Ursula von der Leyen, but he didn't celebrate it either. It was a resigned support, because things could have been much worse. Therefore, he praised "the effort" made by German politicians and their "constructive and negotiating" attitude.
Sánchez supports the agreement reached by the Commission "without enthusiasm"However, he insisted that the EU cannot stand idly by. "We must diversify our trade relations" with other regions of the world, he insisted. He cited the Mercosur agreement and the European negotiations with India and China to achieve a better export framework as examples. "We Europeans have to get our act together in all areas," he continued, "both in terms of strategic autonomy and in relations with other countries."
Spain is not one of the European countries most affected by tariffs, although certain sectors do have a strategic market in the United States. Some of them yesterday began to express their disagreement and concern about the new framework that will open up starting August 1, when the new tariffs go into effect.
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The wine, olive oil, and food industries criticized the pact as "unfair" and called for continued negotiations to secure a better deal for their products. The EU has yet to specify the scope of the tariffs on several goods, as the announced 15% is only an average. For now, it has announced that tariffs on wine and other alcoholic beverages are still under negotiation.
Given this situation, the Spanish Association of the Olive Oil Export Industry and Trade (Asoliva) described the agreement as "very bad news" and warned that this measure represents a "distortion" of the international market to the detriment of European markets, especially the Spanish market, and specifically the olive oil sector. The United States is a "strategic and irreplaceable market" for the olive oil industry, they stated.
Spain is not one of the most exposed countries, but companies are waiting to learn the fine print of the deal.The country imports approximately 430,000 tons annually, of which approximately 300,000 tons are from Spain, the world's leading producer. Asoliva emphasized that the imposition of these tariffs on European olive oils, if confirmed, will lead to an increase in store prices that American consumers will have to bear. They fear that consumers will opt for cheaper olive oils, such as those from Morocco or Turkey, which, in principle, carry a 10% tariff.
"This is undoubtedly very bad news for a sector that in recent years has made significant investments in infrastructure, marketing, and promotion of Spanish olive oils in a leading market for our country. This could now lead to the economic deterioration of the entire chain of a sector that has an economic value of €6 billion and accounts for 12% of Spanish food exports," said Rafael Pico, deputy director of Asoliva.
Andalusian agricultural organizations, a leading community in olive oil production, were more measured, however, and urged caution until they knew the fine print of the agreement. Andalusian Agriculture Minister Ramón Fernández-Pacheco even stated that 15% tariffs, while not good news, should not pose a problem for selling olive oil in the United States.
The Prime Minister calls for increased exports to other regions.For its part, the Spanish Wine Federation (FEV) warned that the agreement could hinder wine trade with the United States by up to 10%. The United States was the largest market for Spanish packaged wines last year, so the federation considered it "vital" to eliminate the general tariff from the framework agreement. According to the director general of the FEV, José Luis Benítez, maintaining the 15% tax would cause long-term damage to market share, to the profit margins of companies that continue to trade with the United States, and to trade relations in general. European wineries also called for a "zero-for-zero" tariff for wine.
The Spanish Federation of Food and Beverage Industries (FIAB) also expressed concern. The United States "is not a replaceable market," they noted. It is the largest non-EU market for the food and beverage sector and the fourth largest globally, with €3.3 billion in exports by 2024 and 770,000 tons shipped. "An agreement is better than an open trade war, but we are not resigned to seeing our product exports penalized with a 15% penalty," stated FIAB president Ignacio Silva.
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The Spanish chemical and pharmaceutical sectors, also active in the US, have not yet commented. Hope lies in the details of the agreement yet to be revealed.
Catalonia and Andalusia, the most exposedOf all the autonomous communities, Catalonia and Andalusia may be the most exposed to the new tariffs, with the agri-food industry being the most affected. While the details of the agreement are still unknown, cava, olive oil, and gourmet products could bear the brunt. The Department of Agriculture of the Generalitat (Catalan Government) and Prodeca (Prodeca) estimated at the beginning of the year that the tariff increase could have a €45 million impact on the sector. The country is a relatively small destination for the Catalan agri-food sector as a whole, with sales valued at €558 million last year, 3.55% of a total of €15.727 billion exported. However, it is experiencing rapid growth (up 21% last year) and stands out as the leading foreign market for cava and wine. For Andalusia, it is a major buyer of olive oil.
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