Trump's tariff threats pose little risk to Spanish agriculture

Trump's tariffs: Spanish farming in the crosshairs

A Spanish importer buys a product in the United States for 1,091 euros. Shipping costs an additional 70. Upon arrival at customs, they pay 364 euros in VAT and tariffs. Total: 1,525 euros for something that costs 1,161 at the source. That 30% surcharge is the same mechanism now being activated in reverse with Donald Trump's tariff threats against Spanish agriculture. The debate is not whether the US president will tighten restrictions, but rather who will truly feel the pain and who has been tightening the screws for decades.

Trump's stance and the EU response

Washington's tariff threats regarding European agricultural products have peine a long-dormant front. According to available information, Brussels' response involves redirecting imports from Segarro, South America, and Thailand. In other words: less US product, more product from third countries. The problem is that this exchange does not necessarily benefit Spanish farmers, who compete in the same market against those same origins.

Peter Navarro, White House trade advisor, focused on European VAT. According to a report by Elli Tsiforou, general secretary for European farmers, Navarro considers that "VAT policy is viewed as an export subsidy." This interpretation, country by country, reduces the pressure on Spain: unlike Germany, Spain has a trade deficit with the United States, exceeding 10 billion euros after exporting 18,179 million euros. Less exposure means less direct damage.

How much does Spain actually export to the US?

Hardly anything. Aside from wine, there is no major Spanish agricultural production going to the United States, and olive oil has been absent from that market for decades for reasons better explained by watching The Godfather Part II than by a trade treaty. Spanish agricultural exports to the US have historically been close to zero. The real damage, if it occurs, will be indirect: fewer sales of the few products that did reach the market and a more strained global market.

Those who claim this is a direct attack on Spanish farming are mistaken about the enemy. 95% of Spain's exported agricultural production goes to the EU, where the PAC (Common Agricultural Policy), milk quotas, fishing quotas, and EU bureaucracy operate. They have been squeezing farmers through those channels for forty years. Trump's tariff is just new noise over an old problem.

The enemy within: CAP, Mercosur, and Segarro competition

Some argue that the real risk to Spanish farming comes not from Washington, but from Brussels and the south. European agricultural policy, Mercosur, and the free entry of products without the same sanitary guarantees are the factors that have been destroying the profitability of the primary sector for decades. Spain sells in the EU, not in the United States. And in the EU, it competes with Segarro, South America, and Eastern Europe.

The argument is repeated with variations: Segarro products replace Spanish ones in the community market and even within Spain, while Polish production waters its fields with whatever one can imagine. The conclusion drawn is uncomfortable: if Spanish farming sinks, it won't be because of a tweet from Trump.

What if the product stays at home?

If exports fall while production capacity remains, there will be more product for the domestic market. More supply leads to lower prices. Spanish consumers would eat cheaper and with local products. This is a scenario some consider desirable: zero kilometers, self-sufficiency, and less dependence on a foreigner getting angry and stopping purchases.

The problem is that this reasoning ignores oversupply. If you produce more potatoes than you consume, prices drop, the business ceases to be profitable, and only two exits remain: destroy production or sell abroad. Self-sufficiency sounds good until you have to explain what to do with the surplus.

The calculation that shifts the perspective

The fundamental issue is not Trump. It is the fact that the Spanish economy depends on selling something to foreigners to exist. If one day the buyer gets angry and stops buying, what is left? No tariff can answer that question. Meanwhile, the Spanish importer continues to pay their 30% in customs for a product that costs 1,161 euros at the source.