Europe and Spain in the face of rising tariffs

Summary

The temporary suspension of some of the measures has brought relief, but Europe and Spain have taken the opportunity to outline their strategy for addressing the increase in trade barriers and potentially more-negative scenarios.

Key points

• Key points:
• Europe has proposed a targeted response, which avoids a proportional and similarly-styled retaliation to that adopted by the United States.
• In particular, this week's announcements are a solid step in this direction, as they focus possible tariff increases on specific goods, ruling out a broader application.
• In Spain, the government has announced a plan that aims to facilitate the transition for companies affected by the tariff increase, by buying them time to either search for other markets, to restructure or to improve their competitiveness.
• In any case, a significant part of the resources announced comes from allocations that were already planned for spending. This is the case with the 5 billion euros that will be redirected from European funds. It is possible that the new use of these funds could have a greater multiplier effect than they would have had under the original plan.
• The impact of another key measure—the provision of 7 billion euros in ICO credit lines—will depend on the level of financial uncertainty and how the tariff hikes affect export activity.

Geographies

Topics

Tags