A trade war is not in the interest of the European Union or the U.S., Spain’s prime minister told CNBC Wednesday.
“We share a strong transatlantic bond … our economies are very interlinked and I believe a trade war is not in the interest [of either party], neither for the U.S., neither for the European Union,” Pedro Sanchez told CNBC’s Steve Sedgwick on the sidelines of the World Economic Forum in Davos, Switzerland.
“A trade war is a kind of a zero-sum gain,” he added. “We need to focus on how do we strengthen our transatlantic relationship, which is now more important than ever.”
Since his inauguration on Monday, President Donald Trump has repeated his threat to impose tariffs on EU goods entering the United States, telling reporters that the EU was “very, very bad to us. So they’re going to be in for tariffs. It’s the only way … you’re going to get fairness.”
On Tuesday, Trump said his administration was discussing imposing an additional 10% tariff on goods imported from China, starting in February. He has also warned that Mexico and Canada could likewise be targeted with import duties.
The European Union’s commissioner for the economy told CNBC that the bloc would respond to any tariffs imposed by the U.S.
“If there is a need to defend our economic interests, we will be responding in a proportionate way,” Valdis Dombrovskis told CNBC’s Steve Sedgwick.
“We’re ready to defend our values and also our interests and rights if that becomes necessary,” he added.
European officials were talking to their U.S. counterparts to find a “pragmatic” solution to the discussion of tariffs, Dombrovskis stressed, noting that global growth could suffer if the economic relationship between the two nations were damaged.
NATO spend
Aside from the trade imbalance with the EU (the EU had a trade goods surplus with the U.S. in 2023, but a deficit in services in the same period) another area of antagonism between the EU and U.S. is defense spending.
In his first term in office, Trump frequently lambasted European nations within the Western military alliance for not spending an agreed 2% of gross domestic product (GDP) on defense spending.
In 2018, at the height of Trump’s irritation with NATO, only six member states had met that target. In 2024, NATO estimates that 23 members met the 2% target. Spain was not one of them.
In fact, the latest NATO data estimates that Spain was the country with the lowest defense spending in 2024, with just 1.28% of GDP spent on defense.
Sanchez defended Madrid’s record on defense expenditure, saying it has worked hard to increase the figure.
“Rest assured, Spain is very committed to achieving this goal of 2% of GDP on defense expenditure but let me also say that, in the last 10 years, we have also increased by 70% our total defense expenditure. If we take those figures in absolute terms, what we can say is that Spain is the 10th top contributor to NATO,” he said.
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