The drop in Spanish sales to the US widens after the tariff war.

Spanish exports to the US fell 14.4% in May, to €1.52 billion, further deepening the poor performance seen in April, which already saw a 13.8% drop, according to foreign trade data published yesterday by the Ministry of Economy, Trade and Business. It was precisely at the beginning of April that US President Donald Trump announced tariffs across the globe on his "liberation day," which he has since postponed or even tightened.

The United States accounts for 4.4% of Spain's foreign sales. This dependence is much lower compared to countries like Germany and Italy, which do a lot of business with the North American giant. Even so, concerns are beginning to arise among companies. Several consulting firms are receiving a flood of requests from Spanish companies asking how they should respond to the more than likely tariff increase.

In the community capital, they assume that Trump has the last word and that he is unpredictable.

"Companies must accept that before the tariff war, tariffs averaged between 2% and 3%. In the best-case scenario, we're talking about perhaps reaching 10%. This means more than tripling the tariff cost. For any company, this is a lot, and they're aware that they need to start looking at what alternatives exist," the trade advisors reason.

In this regard, KPMG has just released a guide to help Spanish companies mitigate the impact of tariffs, especially those most exposed to them, such as machinery, automotive, pharmaceutical, and agri-food. There are several possibilities and degrees of protection. This ranges from reviewing contracts with the importer, recalculating the value of the product by discounting expenses such as insurance to reduce the customs value, and reclassifying the merchandise to reassigning the country of origin of the product based on where it underwent its last processing, or even the possibility of suing the US government, if appropriate.

Shock in the EU accounts

As expected, the European Commission's proposal for the future EU budget between 2028 and 2034 has already ignited the traditional battle between EU countries. Although this is only the beginning of the process—this confrontation, traditionally one of the bloodiest in the Belgian capital, is expected to last two years—the frugal countries have already bared their teeth. Yesterday, the European Affairs ministers made an initial assessment at the General Affairs Council meeting, and several of them refused to accept the two trillion euros that Ursula von der Leyen has proposed to finance the next budget. This is the case of Germany, the Netherlands, Austria, Sweden, and Finland, which also rejected the inclusion of new common debt instruments for exceptional situations such as the pandemic or to allow states that so wish to increase their national allocations to finance European priorities. On the other hand, another large group of countries—including Spain, Italy, and France—charged against the cuts to the traditional items of the cohesion policy and the common agricultural policy (CAP).

Obviously, in the long term, one can always decide to look for alternative markets or establish production directly in the US. Everything will depend on whether an agreement is reached, given the specter of Trump's 30% tariffs starting August 1, or if there is no agreement.

Trade Commissioner Maros Sefcovic, who has just returned from Washington, hasn't brought back good news. The feeling in the European Commission is beginning to turn to frustration. Ultimately, the main problem is that no matter how much Sefcovic, a Slovak diplomat with a reputation for the tortuous Brexit negotiations, talks with the president's emissaries, Howard Lutnick and Jamieson Greer, these two can only guess what will happen, since the final say always rests with the unpredictable Donald Trump, who has taken a liking to the revenue he's achieving thanks to tariffs.

The latest leaks from the Financial Times suggested that the tycoon would impose minimum tariffs of between 15 and 20%, with no sector-specific exemptions.

Companies are already working on how to minimize the tariff burden and assume that there will be extra costs.

From here on, Brussels anticipates three different scenarios. The first is that the EU will negotiate until the last minute to reach an agreement by August 1 that would prevent an all-out trade war. The second is that a satisfactory agreement is not reached, so the commissioners may have to interrupt their vacations to implement the two already prepared countermeasure packages in early August, totaling more than 90 billion euros on US exports. The third is that Trump, in another act of improvisation, will again postpone the negotiations until September.

Given this scenario, European countries are growing increasingly weary, as is the desire to retaliate forcefully against Washington. While initially everyone agreed to put the brakes on and avoid a direct clash, more and more countries now believe Trump will only react if Europe bares its teeth. Even Germany, so concerned about its industry and the losses it is suffering due to the tariffs, is beginning to wonder whether it might not be better to show strength. This also includes removing the powerful anti-coercion instrument from its arsenal and opening up the possibility of punishing American services as well, not just goods.