Trump’s return scares the Spanish countryside and forces us to search for methods to beat a commerce warfare | Economy | EUROtoday

The subsequent 4 years will likely be an impediment course for Spanish firms that do enterprise within the United States. Donald Trump takes workplace as president in January 2025; His return to the White House means new protectionist insurance policies and commerce conflicts. The president-elect’s promise of a common tariff of between 10% and 20% on all imported gadgets, no matter their origin, is the primary risk. The second lies within the chance that it decides to interrupt the settlement reached in 2021 between Washington and Brussels to droop for 5 years the compensatory taxes that each events had established inside the framework of the Airbus-Boeing dispute. If both of the 2 eventualities occurs, greater than 23 billion {dollars} (about 21.7 billion euros) could be at stake, which is the full worth of nationwide exports of products to the American nation in 2023, in response to knowledge from the Trade Commission. United States International (USITC).

The tariff risk is palpable. Proof of that is that American firms themselves have accelerated imports and freight volumes in current months, notably these from China – on whom Trump needs to impose a 60% charge on all merchandise. However, within the nationwide case there is no such thing as a clear technique on how you can face this dilemma. Some analysts recommend that firms are rising their shipments. The different choices are to scale back its publicity to the US market with various locations, search for new distributors and previous methods used between 2017 and 2021, the years through which the Republican was in cost.

In the attention of the hurricane is the agri-food sector, which was the toughest hit throughout Trump’s first time period. “The United States has always complained that Europe protects the agricultural sector too much, so it cannot be ruled out that Trump imposes a tariff of at least 10%,” explains Federico Steinberg, researcher at Elcano and professor on the Autonomous University of Madrid. . In his opinion, “it is logical that companies accelerate their exports at the end of the year, although there is no official data at the moment.” Companies that focus their manufacturing in nationwide territory could be on this state of affairs. On the opposite hand, those who have made investments to ascertain manufacturing crops inside American territory is not going to be affected, since this permits them to keep away from tariffs on imported items.

Pablo López Gil, common director of the Forum of Renowned Spanish Brands, agrees with the analysis and provides that the affect additionally relies on the kind of implementation that the corporate has within the United States. “Some businesses in the food sector have production centers there, so they can better deal with any change in economic policy,” he says. At the second he’s not conscious that the businesses he represents are stockpiling, however he doesn’t rule it out and remembers that in his earlier time period, the Republican president already unleashed a tariff warfare that had a full affect on the nationwide subject.

It was in 2019 when the Trump administration imposed a 25% compensatory tariff on a variety of European meals merchandise because of the Airbus-Boeing dispute (the battle has persevered since 2004 as a consequence of public subsidies granted by each events). In Spain, the checklist of these affected included olive oil, wine, olives, cheeses, and even clementines and mussels. The affect was quick and vital. Between 2019 and 2020, nationwide exports of those merchandise fell by 27%, which represented a lack of 362 million {dollars} (342 million euros), in response to ICEX knowledge.

Oil and wine, on the right track

There are two crown jewels that may very well be in danger once more: olive oil and wine, which signify roughly a 3rd of the full merchandise bought by the United States. Raúl Mínguez, director of the Studies service of the Spanish Chamber of Commerce, remembers that in Trump’s first time period, gross sales of liquid gold to the US market suffered a 60% drop, leaving a wound nonetheless open within the agri-food sector. National wine, which is the fourth largest in import quantity within the US market, recorded related losses.

The Spanish Wine Federation at the moment has no info on potential preventive shipments, though it doesn’t rule out that they’re occurring. It is “simply that no company has communicated it at the moment, it is still too early to be able to encrypt it,” they add. The olive sector, for its half, has extra doubts that exports are being introduced ahead as a consequence of worth points. The common director of Asoliva, Rafael Pico, foresees that manufacturing will likely be larger within the coming months, after two years of low harvest ranges. This, along with a foreseeable discount in manufacturing prices, might scale back the worth at origin, facilitating the sale of the oil within the United States at extra aggressive costs.

Thus, advancing exports now might have the alternative end result than desired as a result of the product shipped at present prices must compete with oils produced at decrease costs sooner or later. In addition, uncertainty concerning the worth on US cabinets and its capacity to soak up a further tariff additional complicates the choice. Therefore, till the ultimate export knowledge for the final quarter is printed, which will likely be obtainable in January, will probably be troublesome to verify whether or not this technique is being broadly adopted by the sector.

The meat trade, which was additionally affected in earlier years by protectionist insurance policies, doesn’t at the moment contemplate the opportunity of advancing shipments. “Due to the type of product we send and the limited useful life, there is no possibility of increasing stocks in importers’ warehouses,” says Giuseppe Aloisio, common director of the National Association of Meat Industries of Spain (ANICE). . A 20% tariff would deal a extreme blow to the sector. The United States is at the moment the main non-European importer of ham on the earth. In 2023, the worth of exports exceeded 34 million euros.

Beyond the countryside, the opposite entrance that’s at risk is the aeronautical sector as a consequence of the opportunity of recovering the ten% charge on trade merchandise. Spain is without doubt one of the key international locations for Airbus, since parts and assemblies for varied fashions of business and navy plane are manufactured within the nation. Companies devoted to aerospace parts additionally stand out, akin to wings, fuselages and navigation programs. Mínguez and Steinberg concern that the nation will lose market share and predict a potential switch of prices to clients, particularly in aircraft tickets.

Long time period measures

In all instances, what is evident is that increasing shares preventively is a short lived measure that doesn’t remedy the underlying downside. Mínguez recollects that in previous expertise, Spanish firms opted for diversification into various markets, akin to Asia, the Middle East and Latin America. They seemed for brand spanking new enterprise companions and explored agreements with US importers and distributors to renegotiate costs, phrases and circumstances, in search of to unfold the affect of the tariffs. Some producers moved operations to 3rd international locations to keep away from taxes and in sectors the place margins allowed it, firms selected to soak up a part of the tax to keep away from passing the rise on to the ultimate shopper and preserve their competitiveness.

In sectors akin to wine and olive oil, firms exported merchandise in industrial codecs not topic to tariffs. They additionally redirected gross sales to secondary markets, a method that may very well be efficient once more. In common, the voices of those sectors demand that Europe act upfront towards Trump to defend the pursuits of the European market.