Donald Trump has threatened to ‘cut off all trade’ with ‘unfriendly’ Spain after it refused to assist the country with its military strikes in Iran – but what would that look like in practice?
Olive oil, which boasted sales to the US worth €732.7 million in 2025, tops the list of Spanish exports most exposed to potential trade restrictions.
The product represents Spain’s single largest agricultural export to the American market, making it particularly vulnerable should Washington move forward with an embargo.
Trump’s remarks, delivered on Tuesday, included references to embargoes and claims that the US ‘doesn’t need anything from Spain’.
However, it remains unclear whether any measures would target Spanish exports only or extend to US goods heading to Spain, in what is a distinction with major economic implications.
Trade imbalance widens
According to Spain’s Secretary of State for Trade, the country’s trade deficit with the US rose by 34.4% in 2025, reaching €13.46 billion.
This shift reflects an 8% drop in Spanish exports to the US (down to €16.7 billion), and a 7% rise in imports from the US (up to €30.17 billion).
A key factor behind the growing deficit is Spain’s increased reliance on US liquefied natural gas (LNG), whose import bill more than doubled from €2.01 billion to €4.21 billion in a year, as Europe continues to replace Russian energy supplies following the Ukraine invasion.
Olive oil: More volume, less value
Although Spain exported greater volumes of olive oil to the US in 2025 compared to 2024, total revenue fell sharply from €1.013 billion to €732.7 million.
The paradox is explained by falling prices, as olive oil became 31.6% cheaper year-on-year, according to Spain’s National Statistics Institute (INE).
Even so, the US remains one of the most important markets for Spanish producers.
Spain is the world’s leading olive oil producer, accounting for roughly 50% of global output, with production concentrated in Andalucia, Castilla-La Mancha and Extremadura. The sector supports thousands of jobs and forms a cornerstone of rural economies.
An embargo would force producers to seek alternative markets or accept lower prices elsewhere, putting further pressure on profitability after an already difficult year.
Other Spanish sectors at risk
Olive oil would not be alone in feeling the impact.
Other Spanish exports to the US that could suffer include:
- Refined petroleum and mineral oils: €715.2 million
- Wine: €288.3 million
- Vehicle components: €205 million
Spanish wine producers – particularly in regions such as La Rioja, Ribera del Duero and Catalonia – could lose one of their most lucrative export destinations.
Meanwhile, the automotive supply sector is already under strain from global competition and the transition to electric vehicles, making further trade barriers especially unwelcome.
What if the embargo works both ways?
If restrictions were reciprocal, Spain would face immediate challenges in securing alternative supplies of:
- Liquefied natural gas (€4.21bn in 2025 imports)
- Pharmaceutical products (€6.73bn)
- Machinery and mechanical equipment (€2.74bn)
The scale of US pharmaceutical imports is particularly notable, highlighting Spain’s reliance on American-produced medicines and active ingredients.
Replacing US LNG would also prove complex, given its importance in Spain’s energy mix since the reduction of Russian supplies.
Trump’s threat comes amid already strained US–EU trade relations, with tariffs on certain European goods having contributed to the recent export decline.
Brussels has previously warned it would respond to unjustified trade barriers with coordinated countermeasures.
Any embargo targeting Spain specifically could be interpreted as a challenge to the EU single market – potentially triggering collective retaliation and escalating into a broader transatlantic trade dispute.
For now, no formal measures have been announced.
Read more Andalucia news at the Spanish Eye.
