The Spanish government, led by President Pedro Sánchez, has announced a substantial economic aid package valued at €14.1 billion aimed at mitigating the effects of tariffs recently imposed by the United States under President Donald Trump.

This initiative, described as a "Plan for Response and Relaunch," is designed to support both companies and workers, with the goal of preventing job losses and encouraging expansion into new sectors and markets in the wake of a growing trade conflict between the U.S. and other countries.

Sánchez disclosed the details of this plan during an address at Moncloa, where he gathered representatives from various productive sectors and labor organizations.

He emphasized the government's proactive stance, stating, "The Spanish government will not wait; we will respond anticipatorily to be prepared."

The comprehensive aid package comprises €14.4 billion, which includes €7.4 billion in new funds, primarily consisting of loans and guarantees from the official credit institution (ICO), as well as an existing budget allocation of €6.7 billion that will be redirected from other budgetary items, largely sourced from European funds.

A key component of the initiative is the activation of the RED mechanism, a system developed after the pandemic that allows affected companies to alleviate their salary costs, with the state covering the majority of these expenses.

Sánchez articulated that the plan is structured to cushion the negative impacts of the tariff-induced trade war and to create a protective shield for the economy.

The plan's implementation will be overseen by an inter-ministerial commission led by the Minister of Economy, Carlos Cuerpo.

Initial funding, directed through the ICO for financing purposes, is expected to be available imminently, as indicated by government sources.

The president also criticized Trump’s approach to trade, labeling it a zero-sum mentality, which he believes prioritizes U.S. gains at the expense of other nations.

Sánchez advocated for open trade, asserting that it is a driver of economic growth, asserting, "Science and history have shown us that the idea of zero-sum is mostly false and harmful.

Abundance comes more from cooperation than confrontation."

The bulk of the €14.1 billion package consists of ICO loans or reallocated European funds.

A significant portion, amounting to €6 billion, will be allocated for loans and guarantees specifically to assist companies in need of financing for their productive transformation or operational costs.

Additionally, the government aims to directly support firms undergoing productive transformations by establishing the Industrial Productive Investment Support Fund, equipped with €200 million.

This fund is intended to provide loans but also to invest in companies that establish new manufacturing facilities.

Within the context of this response to U.S. tariffs, Sánchez included automotive sector support as part of the MOVES plan, which was approved by the Council of Ministers.

This initiative, funded with €400 million, aims to boost automobile demand, thereby alleviating the economic repercussions for Spanish manufacturers, who currently face a 25% tariff.

The government plans to leverage the RED mechanism, part of the labor reform, enabling affected companies to apply for temporary employment regulation files (ERTEs) to manage labor costs.

Furthermore, it will reassign €5 billion from European funds for various measures aimed at supporting the internationalization and diversification of companies.

This aspect also encompasses €2 billion in credit insurance and risk coverage to facilitate new export contracts, alongside €500 million designated for small and medium-sized enterprises (SMEs) internationalization.

Sánchez asserted the government's commitment to utilizing all available state resources to protect and assist the populace.

Certain budget allocations will require approval from the Congress of Deputies, prompting Sánchez to seek collaboration from all political parties in enacting the plan.

In parallel, the president outlined further measures that will be proposed to the European Commission in response to the U.S. tariffs.

Primarily, he will request the activation of a special state aid framework, ensuring that the funds mobilized do not conflict with existing European regulations regarding state aid.

European competition laws are notably stringent when it comes to public assistance for companies.

Additionally, Sánchez will advocate for the creation of a fund to assist the most affected sectors, with funding sourced from European Union tariffs.

In the event that Trump does not reverse his tariffs, it is anticipated that the European Union will respond with counter-tariffs, which could pose a negative impact on the European economy while simultaneously increasing revenue.

Sánchez aims for these funds to be utilized to support the hardest-hit sectors.

Finally, Sánchez will push for a definitive commitment to ratifying the trade agreement with Mercosur (comprising Argentina, Brazil, Paraguay, and Uruguay) during discussions in Brussels.

This agreement has been pending final approval from European member states, with some nations, such as France, expressing opposition.

Sánchez has asserted that the agreement is more crucial than ever, viewing it as a vital link to South America, which can provide benefits to Spain acting as Europe's gateway to the continent.