Spain Announces €14.1 Billion Plan to Counteract Trump's Tariff Impact
Government outlines a comprehensive response package for sectors affected by new tariffs from the United States.
Pedro Sánchez, the President of the Spanish Government, unveiled a "Plan for Response and Trade Relaunch" valued at €14.1 billion on Thursday, aimed at mitigating the effects of the unilateral tariff measures announced by U.S. President Donald Trump.
The proposal includes €7.4 billion in new financing and redirects €6.7 billion from previously approved funds.
The budget is intended to support loans, guarantees from the Official Credit Institute (ICO), subsidies, and labor protection mechanisms for sectors severely impacted by the tariffs, including automobile, agri-food, pharmaceutical, steel, timber, and semiconductor industries.
The announcement follows the escalation of a trade war initiated by the Trump administration, which declared a universal 10% tariff on imports.
This will be complemented by specific tariffs for various territories, with the European Union (EU) facing a 20% levy starting April 9. Additionally, from Thursday onwards, a 25% tariff has been implemented on car exports to the United States.
In response, Sánchez convened a meeting with representatives from Spain's productive sectors at Moncloa, involving key figures such as seven ministers, including Vice Presidents Yolanda Díaz and Sara Aagesen, alongside the ministers of Economy, Industry, Agriculture, Health, and Digital Transformation.
The government intends to organize a trade meeting with regional governments, alongside discussions with parliamentary groups, with Minister of Economy and Trade, Carlos Cuerpo, set to address the Congress of Deputies.
The plan consists of two lines of guarantees and ICO financing, amounting to €6 billion, as well as a €200 million support fund for productive industrial investment aimed at facilitating modernization and the establishment of new facilities by businesses.
To protect workers in the affected sectors, the government will activate the RED mechanism, allowing companies to reduce working hours or suspend contracts, akin to the temporary employment regulation files (ERTE) used during the pandemic.
Sánchez highlighted the establishment of a social dialogue table with employers and trade unions to monitor the evolving situation.
In addition to damage mitigation, the government asserts that the plan will also serve to "reorient" the country’s productive capacity.
Notably, €5 billion from European funds will be redirected to assist companies facing production challenges due to the tariff shock, especially within the automotive industry, which will benefit from an additional €400 million stimulus through the new MOVES plan to support electric vehicle purchases.
An allocation of €2 billion will be dedicated to credit insurance and export risk coverage, with €500 million earmarked for the internationalization of small and medium-sized enterprises.
This latter initiative will be championed by a dedicated plan from ICEX, targeting the sectors most affected.
Sánchez firmly stated that claims made by Trump regarding EU tariffs being as high as 39% on U.S. goods are "not true," clarifying that EU tariffs actually average around 3% depending on the product category.
He criticized the U.S. approach as counterproductive, arguing that a return to "19th-century protectionism" will harm global economies, including that of the U.S. Sánchez described Washington's actions as an "excuse to punish" countries and generate revenue to address deficits induced by tax cuts.
The Spanish President has urged Trump to reconsider and engage in negotiations with the EU, echoing remarks from European Commission President Ursula von der Leyen, who stated that Europe is ready to respond with measures, though exact details were not disclosed.
She emphasized the need to shift from confrontation to negotiation.
In conjunction with his announcement, Sánchez proposed four urgent measures to the European Commission: 1) A temporary state aid framework to enhance flexibility for national measures; 2) Establishment of a support fund for affected sectors financed through tariffs; 3) Review of EU regulations to reduce market fragmentation; and 4) Prompt ratification of the Mercosur trade agreement.
Sánchez also underscored the necessity of accelerating market integration in the EU and diversifying global trade links while maintaining an open strategic autonomy.
He characterized the current trade challenges as a potential opportunity for the advancement of the European economy.
Regarding national politics, Sánchez appealed to political groups to avoid "imposed divisions" and partisan calculations in support of the government plan, which has been in preparation for two weeks.
Some measures require ratification through a Royal Decree and will be discussed in the Cabinet meeting next Tuesday.
Government sources have acknowledged the constructive tone of opposition leader Alberto Núñez Feijóo and expressed hope for continued cooperation, though dialogue with Vox remains complex.
The proposal includes €7.4 billion in new financing and redirects €6.7 billion from previously approved funds.
The budget is intended to support loans, guarantees from the Official Credit Institute (ICO), subsidies, and labor protection mechanisms for sectors severely impacted by the tariffs, including automobile, agri-food, pharmaceutical, steel, timber, and semiconductor industries.
The announcement follows the escalation of a trade war initiated by the Trump administration, which declared a universal 10% tariff on imports.
This will be complemented by specific tariffs for various territories, with the European Union (EU) facing a 20% levy starting April 9. Additionally, from Thursday onwards, a 25% tariff has been implemented on car exports to the United States.
In response, Sánchez convened a meeting with representatives from Spain's productive sectors at Moncloa, involving key figures such as seven ministers, including Vice Presidents Yolanda Díaz and Sara Aagesen, alongside the ministers of Economy, Industry, Agriculture, Health, and Digital Transformation.
The government intends to organize a trade meeting with regional governments, alongside discussions with parliamentary groups, with Minister of Economy and Trade, Carlos Cuerpo, set to address the Congress of Deputies.
The plan consists of two lines of guarantees and ICO financing, amounting to €6 billion, as well as a €200 million support fund for productive industrial investment aimed at facilitating modernization and the establishment of new facilities by businesses.
To protect workers in the affected sectors, the government will activate the RED mechanism, allowing companies to reduce working hours or suspend contracts, akin to the temporary employment regulation files (ERTE) used during the pandemic.
Sánchez highlighted the establishment of a social dialogue table with employers and trade unions to monitor the evolving situation.
In addition to damage mitigation, the government asserts that the plan will also serve to "reorient" the country’s productive capacity.
Notably, €5 billion from European funds will be redirected to assist companies facing production challenges due to the tariff shock, especially within the automotive industry, which will benefit from an additional €400 million stimulus through the new MOVES plan to support electric vehicle purchases.
An allocation of €2 billion will be dedicated to credit insurance and export risk coverage, with €500 million earmarked for the internationalization of small and medium-sized enterprises.
This latter initiative will be championed by a dedicated plan from ICEX, targeting the sectors most affected.
Sánchez firmly stated that claims made by Trump regarding EU tariffs being as high as 39% on U.S. goods are "not true," clarifying that EU tariffs actually average around 3% depending on the product category.
He criticized the U.S. approach as counterproductive, arguing that a return to "19th-century protectionism" will harm global economies, including that of the U.S. Sánchez described Washington's actions as an "excuse to punish" countries and generate revenue to address deficits induced by tax cuts.
The Spanish President has urged Trump to reconsider and engage in negotiations with the EU, echoing remarks from European Commission President Ursula von der Leyen, who stated that Europe is ready to respond with measures, though exact details were not disclosed.
She emphasized the need to shift from confrontation to negotiation.
In conjunction with his announcement, Sánchez proposed four urgent measures to the European Commission: 1) A temporary state aid framework to enhance flexibility for national measures; 2) Establishment of a support fund for affected sectors financed through tariffs; 3) Review of EU regulations to reduce market fragmentation; and 4) Prompt ratification of the Mercosur trade agreement.
Sánchez also underscored the necessity of accelerating market integration in the EU and diversifying global trade links while maintaining an open strategic autonomy.
He characterized the current trade challenges as a potential opportunity for the advancement of the European economy.
Regarding national politics, Sánchez appealed to political groups to avoid "imposed divisions" and partisan calculations in support of the government plan, which has been in preparation for two weeks.
Some measures require ratification through a Royal Decree and will be discussed in the Cabinet meeting next Tuesday.
Government sources have acknowledged the constructive tone of opposition leader Alberto Núñez Feijóo and expressed hope for continued cooperation, though dialogue with Vox remains complex.
Translation:
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