Trump Threatens to Cut All Trade with Spain After NATO Ally Refuses 5% Defence Spending Target

President Donald Trump has ordered US authorities to cut off all trade with Spain, the NATO ally that has refused to adopt the alliance's new target of spending 5% of GDP on defence. The announcement, made on 8 July during the NATO leaders' summit in Ankara, Turkey, represents a sharp escalation in long-running disputes over fair burden-sharing among members. Spain remains the sole country to have secured an exemption from the commitment agreed at the 2025 summit in The Hague, opting instead to limit its defence budget to roughly 2.1 per cent of GDP.

Trump made the directive to Treasury Secretary Scott Bessent for the second time amid broader frustrations with European contributions and Spain's positions on other matters such as support during tensions involving Iran.

Trump's Rebuke Highlights Burden Sharing Dispute

At a press conference with NATO Secretary General Mark Rutte, Trump described Spain as a 'wasted cause' and declared that the United States no longer wished to conduct any trade business with the country. He stated: 'Spain is a terrible partner in NATO. They don't participate, they don't pay. I don't want anything to do with Spain. Cut off all trade with Spain, please, including visits.' He suggested that Madrid would eventually 'come running back'.

The remarks underscore persistent US concerns that some allies have not shouldered sufficient responsibility for collective defence since the end of the Cold War. Trump has repeatedly pressed for higher spending, leading to the adoption of the ambitious five per cent goal that doubles the previous benchmark.

Spain's Defence Spending Record And Refusal

Spain has increased its defence expenditure significantly over the past decade. SIPRI figures show that spending rose to $40.2 billion (£30 billion) in 2025, lifting the proportion of GDP above two per cent for the first time in three decades.

Despite this progress, Prime Minister Pedro Sánchez's government has resisted the five per cent target. Sánchez has cited the need to balance military requirements with fiscal discipline and continued investment in social welfare programmes.

Spanish officials argue that the country can deliver the necessary capabilities through more efficient spending rather than simply meeting a higher percentage, and they have already tripled defence investment since 2018 to meet the earlier two per cent guideline. The exemption allows Spain to focus resources on areas it deems priorities without the pressure of the higher target by 2035.

Bilateral Trade Links Face Uncertainty

Trade between the United States and Spain amounted to $74.5 billion (£55.6 billion) in goods and services during 2025, according to US data, with American exporters enjoying a surplus.

Key US exports include energy supplies such as crude oil and liquefied natural gas, which have grown in recent years. Implementing a full trade cutoff would face legal and practical hurdles because the European Union negotiates trade agreements on behalf of its members, including Spain.

No immediate detailed reaction has come from Madrid, Although the development adds to strains within NATO as leaders grapple with how to sustain support for Ukraine and strengthen deterrence against potential threats while managing domestic economic pressures across member states.