
President Trump vows to double Spain’s trade costs after it becomes the only NATO nation refusing to commit to the new 5% defense spending goal, igniting a diplomatic showdown that threatens to reshape U.S.-EU economic relations.
Key Takeaways
- President Trump has threatened Spain with “paying twice as much” in future trade deals after it became the sole NATO nation refusing to commit to the new 5% of GDP defense spending target.
- NATO leaders agreed to significantly increase defense spending to 5% of GDP annually on core defense requirements by 2035, with most major European nations already committed.
- Trump indicated he plans to bypass European Union protocols to negotiate directly with Spain, potentially straining broader U.S.-EU economic relations.
- The Trump administration has set a July 9 deadline for the EU to agree to a trade deal, with potential 50% tariffs on EU imports if no agreement is reached.
- Spain’s refusal has drawn criticism from other NATO members, particularly Poland and countries bordering Russia who have already committed to the increased spending.
Trump’s Trade Ultimatum to Spain
President Trump has taken a firm stance against Spain’s reluctance to increase its defense spending, threatening significant economic consequences. During the NATO summit, Trump singled out Spain as the only member refusing to commit to the alliance’s new defense spending target of 5% of GDP. In response to this defiance, Trump declared that Spain would face severe trade penalties, essentially doubling their costs in future trade agreements with the United States. This aggressive approach demonstrates Trump’s commitment to enforcing equitable defense burden-sharing among NATO allies.
The president’s confrontational strategy comes as NATO leaders reached a landmark agreement to increase defense spending across the alliance. While most major European nations including Britain, France, Germany, and the Netherlands have embraced the new target, Spain has claimed it cannot meet the 5% threshold, citing potential strain on its welfare programs. This refusal has isolated Spain diplomatically within the alliance and placed it directly in Trump’s crosshairs as he seeks to reshape NATO into what he considers a more balanced partnership.
Will Make Spain "Pay": Trump Threatens Tariffs Over NATO Defense Spending Holdout https://t.co/WKJMPGMIjP
— zerohedge (@zerohedge) June 25, 2025
NATO’s Historic Defense Spending Agreement
The NATO summit produced what many consider a transformational agreement, with allies committing to a substantial increase in defense spending. Secretary-General Mark Rutte emphasized the historic nature of the commitment, despite underlying tensions. The new agreement establishes a primary target of investing 5% of GDP annually on core defense requirements by 2035, along with a secondary target of 1.5% GDP for broader defense-related spending like infrastructure improvements and cyber defense. This represents a significant escalation from previous commitments.
“Allies commit to invest 5% of GDP annually on core defense requirements as well as defense- and security-related spending by 2035 to ensure our individual and collective obligations,” stated NATO leaders in their joint communiqué.
The decision reflects growing concerns about Russia’s long-term threat to European security, particularly among nations bordering Russia. Poland, the Baltic states, and Nordic countries have been among the most vocal advocates for increased defense capabilities. The United States, already spending close to the 5% benchmark, has used Trump’s leadership to push European allies toward greater military self-sufficiency. Despite Hungary’s reluctance to view Russia as a significant threat, the overwhelming majority of NATO members have embraced the new spending targets.
“That economy could be blown right out of the water.”
President Trump threatens to double tariffs on Spain over its defense spending.https://t.co/ouvgaoFcoq
— NOTUS (@NOTUSreports) June 25, 2025
Potential Economic Fallout and Diplomatic Tensions
President Trump’s threat to bypass European Union trade protocols and negotiate directly with Spain signals a potentially disruptive shift in U.S.-EU economic relations. The Trump administration has established a July 9 deadline for the EU to reach a trade deal with the United States, with the threat of 50% tariffs on EU imports if no agreement materializes. Spain’s defiance on defense spending has now placed it at additional risk of targeted economic measures, with Trump explicitly stating his intention to extract compensation through trade mechanisms.
“something that no one really thought possible. And they said, ‘You did it, sir. You did it.’ Well, I don’t know if I did it, but I think I did,” remarked President Donald Trump regarding the NATO spending agreement.
Other NATO members have openly criticized Spain’s position, further isolating the country diplomatically. Poland’s Deputy Prime Minister has been particularly vocal, reflecting the perspective of nations that face more immediate security threats from Russia. For these countries, Spain’s reluctance appears self-centered and detrimental to collective security interests. Trump’s insistence on economic consequences aligns with his broader approach to international relations, where economic leverage serves as a primary tool for achieving foreign policy objectives.
President Donald Trump criticizes Spain for not agreeing to new defense spending thresholds adopted by NATO and suggests the country could face tariffs twice as high from the US https://t.co/cTkQyXyDrf pic.twitter.com/knNTVrVxPf
— Bloomberg TV (@BloombergTV) June 25, 2025
A Shifting Perspective on NATO
President Trump’s approach to NATO has evolved significantly, with the president now expressing a more positive view of the alliance following the new defense spending agreement. During the summit, Trump declared that his perception of NATO had changed, now seeing the organization as more equitable with the 5% spending commitment from most members. This represents a notable shift from his previous criticisms of the alliance as obsolete and unfairly burdening American taxpayers. The agreement validates Trump’s long-standing demands for greater European investment in collective defense.
While celebrating the defense spending breakthrough, tensions remain regarding NATO’s approach to Ukraine. The summit’s declaration that the alliance “stands by Ukraine in its pursuit of peace and will continue to support Ukraine on its irreversible path to NATO membership” reflects a consensus that Trump has approached cautiously. Unlike many European leaders who advocate for Ukraine’s rapid integration into NATO, Trump has maintained a more reserved stance on Ukraine’s membership and has signaled interest in finding a negotiated settlement to the conflict with Russia.
The Spain situation highlights Trump’s commitment to transforming international organizations into arrangements that more directly serve American interests through economic and security burden-sharing. By targeting Spain with specific economic consequences, Trump demonstrates his willingness to enforce compliance with alliance commitments through bilateral pressure when multilateral consensus fails to achieve desired outcomes. This approach reflects his businessman’s perspective on international relations, where agreements must deliver tangible benefits or face renegotiation.