Trump softens stance on Spain after trade threat, citing increased NATO contributions

Madrid said on Thursday that US President Donald Trump had softened his rhetoric on Spain hours after threatening to halt trade with the Nato ally, because he had been made aware of a surge in Madrid's contributions to the alliance in recent years.

On his way back to the United States after the Nato summit in Ankara, Trump told reporters aboard Air Force One: "I did have issues, and I still do. But Spain, they came back all the way today. Spain was very generous today."

Asked what Spain had done, he said: "They honoured a request for lots of payments."

A spokesperson for Spanish Prime Minister Pedro Sanchez said this was understood to be a reference to Madrid complying with Nato's former defence spending target of 2 per cent of GDP.

At the summit, Sanchez highlighted that Spain would reach that goal this year after more than doubling nominal defence spending from 0.98 per cent of GDP in 2017 to nearly €33 billion.

Trump had earlier called Spain a "terrible partner" and ordered an immediate halt to all trade with the country over disputes on defence spending and the Iran war.

However, he has repeatedly criticised Spain for not agreeing to the new 5 per cent of GDP defence target by 2035, which Madrid says would require cuts to social benefits.

US mulls 'menu' of Spanish products for embargo

It was not immediately clear what the softening of Trump's rhetoric might mean for his trade threat.

Asked about next steps, a US official told Reuters that federal agencies would present Trump with a "menu" of Spanish products that may be embargoed.

Trade lawyers said Trump could invoke the International Emergency Economic Powers Act to impose a full or partial embargo on Spanish imports.

His first administration imposed a 30 per cent anti-dumping tariff on Spanish black olives in 2018.

Defence Minister Margarita Robles was set to meet with US ambassador Benjamin Leon later on Thursday for a "working meeting," according to the Spanish government's agenda.

Opposition criticises Sanchez

Some figures in the main opposition People's Party blamed Sanchez for the spat but said they stood with their country.

A senior PP official highlighted the interdependence between Spanish and US firms, saying "economic reality takes precedence over grandiloquent statements."

Santiago Abascal, leader of the far-right Vox party and a Trump ally, said the tensions were "absolutely dramatic" and accused Sanchez of "destroying Spain's credibility on the world stage."

Sources in the Spanish delegation cited by El Mundo said Madrid likened the dispute to a staged fight lacking actual conflict, and that officials had not detected any economic consequences or a decline in investment in Spain despite Trump's criticisms.