Spanish companies to face the Trump challenges
Manufacturers should prepare for the expectation of higher tariffs and the implementation of policies to support products made in the United States. This free webinar offers the opportunity to gather more information on the intentions of the new American president.
Donald Trump officially began his new term yesterday. The policies adopted by the 47th president of the United States will largely determine the evolution of global economic activity in 2025, including that of Spain. Trump has been talking about his intentions in various areas for months, including the economy, and has announced that he will use tariffs as a pressure tool to negotiate with trading partners such as Canada, Mexico and the European Union (EU). Mario González García, chief consultant at Banco Sabadell in Miami, believes that substantial changes are coming in the business field regarding tax policy, corporate regulations and international trade. González García will be one of the speakers participating in the webinar United States: post-election vision 2024 , by Banco Sabadell.
The debate on the future of trade relations between Spain and the United States is now urgent in order to try to understand how Trump’s policies will affect Spanish exporters or firms that are based in the world’s largest market. José Manuel Corrales, professor of Economics and Business at the European University of Madrid, believes that although many of the proposals launched by Trump in his previous term (between 2016 and 2019) remained mere announcements, this time it is different, since the president has, at least until 2026, a majority in Congress.
Tariffs as a bargaining chip
Just days after winning the election, Trump threatened Mexico and Canada, countries with which he has a free trade agreement, with imposing tariffs of 25% on their products. He also threatened China, which he considers a competitor and which is the second country from which he imports the most, with tariffs of up to 40%. He also announced a general tariff of between 10% and 20%, which, if confirmed, would affect imports from the European Union (EU) and, consequently, Spanish imports, if Brussels does not increase its purchase of gas and oil from the US.
Corrales, from the European University, warns that the increase in these rates would lead to a spiral of intense trade war between countries. “And, therefore, it would mean a deterioration of free trade and the expectations of European companies, and as a result, of Spanish companies,” he explains.
These tariffs would put a spanner in the works of European economic growth. Exporting companies would be the most affected, especially those in the automotive, aeronautical, renewable energy and fruit and vegetable sectors, which are the most closely linked to the US. Trump, Corrales points out, does not use these tariffs to obtain price reductions on his imports, but rather as a negotiating tool and leverage in other areas.
During his previous term, Trump had already imposed tariffs on EU products, after the World Trade Organization (WTO) declared that the EU had granted illegal aid to the European aeronautical company Airbus, says Juan Carlos Pereira, director of the Spanish Chamber of Commerce in the United States (US). At that time, the US administration drew up a list of goods from certain European countries that would be subject to a 25% surcharge. These included Spanish olive oil and olives, whose exports to that country fell between 2019 and 2020, according to the Foreign Trade Institute (ICEX Spain Export and Investment).
According to Corrales, Spanish producers and distributors of black olives and oil tried to compensate for their losses by seeking alternative markets, such as those in Latin America, the Middle East and Asia.
Banco Sabadell’s González García points out that, while sectors such as vehicle manufacturers and chemical products are expected to be the most affected, there are fears that the olive oil industry could suffer another blow. In the US, an increase in tariffs, explains Corrales, could lead to a rise in prices and a new inflationary crisis, which would generate a loss of purchasing power for Americans, so Trump will have to play his cards to find a balance between both factors, explains Corrales.
The Bank of Spain has simulated the impact that the tariff policy would have on the US economy and has determined that inflation runs the risk of rising between 0.6 and 1.6 points more than expected and its Gross Domestic Product (GDP) would grow between 0.4 and 1.2 points less in 2025. According to the institution’s forecast, the impact of these policies in Spain would increase inflation by one tenth, which it estimates at 2.1%, and would lower growth forecasts by one tenth, set at 2.5 by the Government.
Business opportunities
The US market has always offered many attractions for Spanish companies. It is one of the largest in the world, with more than 330 million potential consumers who also have high purchasing power, explains Pereira, from the Chamber of Commerce. For this reason, it is one of the destinations chosen by many national companies. “Interest in accessing this market is constant and was only slowed down by the uncertainty of the elections. But, once the result was known, it has recovered its pace. Many projects that were on hold are being closed,” summarises the director.
Pereira explains that they have detected that many companies have become interested in entering the United States following the election results, as they expect the business environment to be more friendly to companies. González García, from Banco Sabadell, explains that Trump has promised to lower the corporate tax rate to below 21%. And, as the politician announced at the beginning of November at the Economic Club of New York, it will be 15% for companies that manufacture their products in the US. If he complies with this, Pereira points out, “it will be very attractive for these types of companies.”
Spanish companies that only export to the United States will be affected by the tariffs, should they establish themselves there. Meanwhile, national companies that are already established in the North American country or plan to do so will benefit. “According to the information Trump has left, he will give priority to products manufactured in the United States, so if I am a Spanish manufacturer whose final destination is that country, it will be in my interest to manufacture there, as there will be no limit to it. In fact, we have seen a significant increase in the interest of Spanish companies in establishing themselves here,” he explains.
What will it take to access the US market in 2025?
The requirements for starting any business in the US are not going to change, for the moment, with the arrival of Trump, with the exception of tariffs. Pereira points out that in a market with so much supply it is essential that the product or service that you want to introduce offers some advantage over its competitors. “If not, it makes little sense to bring it because it is a very saturated market,” he explains. The entrepreneur must take into account that the beginning will be hard and long, so he must be patient and prepare a budget large enough to last at least one or two years. “During the first year he will have to cultivate relationships, gain the trust of potential clients and business partners.” He must assume, Pereira sums up, that he will not get results immediately, especially if, as Trump has warned, priority is given to companies that produce in the country, which requires many more resources and time than if only exported from Spain.
