Pedro Sánchez, the Prime Minister of Spain, urged U.S. President Donald Trump on March 28, 2025, to reconsider and engage in dialogue regarding the imposition of tariffs by the United States on imported goods.

During a forum focused on European funding, Sánchez remarked that if the tariffs are not revoked, the European Union (EU) would respond with 'speed, proportionality, and unity.'

This statement follows the recent announcement from the Trump administration regarding a 25% tariff on all vehicles not manufactured in the United States, set to take effect on April 2, 2025, an initiative described by the White House as 'liberation day.' Sánchez emphasized that the EU would act quickly to support its farmers and businesses, highlighting that a contingency plan has already been devised to assist sectors most affected by this trade policy.

He remarked that a trade war would negatively impact all parties involved, particularly the most vulnerable.

The emphasis on a coordinated response from community partners was reiterated, with Sánchez calling current international difficulties a reason for greater solidarity.

In related discussions, the Executive Vice-President of the European Commission for the Green Deal, Teresa Ribera, described the tariff policies initiated by the U.S. as an 'economic folly' and 'bad news' for economic stability.

On security matters, Sánchez addressed the drive for military rearmament initiated in Brussels, stating that post-World War II security architecture led Europe to delegate significant competencies to third countries.

He envisioned that the ongoing conflict in Ukraine necessitates a deeper integration within Europe, including the potential formation of European armed forces, aiming for a robust dissuasive capacity and greater influence in the evolving international order centered on diplomacy rather than force.

Sánchez also cautioned regional governments that 'without reforms, there are no European funds,' implicitly referencing a recent agreement reached between the Valencian community government and the far-right party Vox, which he criticized for undermining the EU's Green Deal.

He affirmed the need for mutual loyalty in managing European funds, emphasizing that ideological deviations must not jeopardize the arrival of Next Generation EU funds in Spain.

In defense funding, the Spanish government has secured an additional margin of approximately €3.2 billion based on the budget execution results through the end of 2024. The nation reported a deficit of 2.8% of GDP, totaling €44.597 billion, which is below the 3% limit set by the European Commission.

This improvement provides the government with some financial leeway to approach the NATO commitment of achieving a 2% military expenditure by 2029.

To navigate challenges in the General State Budget for this year, the government is employing fiscal engineering to elevate defense and security spending while ensuring social spending remains unaffected, awaiting further mechanisms from Brussels, including direct transfers.

Spain's military expenditure was recorded at 1.28% of GDP in 2024 based on NATO assessments, with assumptions that certain departmental expenditures should also qualify as military spending, potentially pushing the figure above 1.4% by 2025.

On the fiscal front, Spain’s central government concluded 2024 with a deficit of 2.58% of GDP, while autonomous communities reported a deficit of 0.10%, and local corporations achieved a surplus of 0.42%.

The Social Security system recorded a deficit of 0.53%, reflecting improvements attributable to employment growth.

The government anticipates that record-hitting tax revenues, which surpassed €294.734 billion—an 8.4% increase from 2023—will bolster its fiscal position.

Improved labor market conditions contributed to a 7.6% rise in personal income tax revenues while VAT collections also posted significant increases.

Revenue from corporate taxes surged by 11.5%, driven by solid performance among large firms, with inflation accounting for 20% of revenue growth.

The Spanish government is also negotiating with Brussels to postpone implementation of an increased diesel tax, essential for receiving total funding from the EU, highlighting the interplay between extraordinary income and commitments to electric vehicle infrastructure as a rationale for delays.