USTR: Trump could halt trade with Spain under IEEPA, but may not after meeting with Sánchez

President Donald Trump could sever trade with Spain using the International Emergency Economic Powers Act (IEEPA) — the same law behind his failed "reciprocal" tariffs — but may no longer wish to do so following a "good meeting" with Spanish Prime Minister Pedro Sánchez, U.S. Trade Representative Jamieson Greer said Thursday.

Key Developments

• Legal authority exists: Greer confirmed that Trump could use IEEPA to single out Spain for trade restrictions, despite Spain being a member of the European Union.
• Supreme Court context: The Supreme Court struck down Trump's IEEPA-based tariffs in February, but Greer noted the ruling "highlighted that IEEPA clearly says you can prohibit trade."
• Shift in tone: Just one day earlier, Trump declared he wanted to "cut off all trade with Spain, including visits," citing Spain's refusal to boost NATO defense spending.

Greer's Remarks

"Everyone has heard of IEEPA, famously in connection with our tariffs over the past year, but the reality is, IEEPA has been in place for many decades," Greer told reporters at the White House.

"It is currently an authority that is used to limit trade with places like North Korea," he explained.

While Trump "for sure can" take that step, Greer stressed that the president may no longer want to, following a "good meeting" with Sánchez to discuss "core issues about payment."

"I've heard positive developments on that front on Spain," Greer said.

Trump's Earlier Stance

At a NATO summit in Ankara, Turkey, Trump expressed frustration with Spain's resistance to increasing defense spending:

"Spain is a terrible partner in NATO. They don't participate. They don't pay. I don't want anything to do with Spain."

Trump has demanded all NATO allies raise defense spending to 5% of GDP. Most members have agreed to higher targets, but Spain rejected the proposal as "unreasonable."

A Shift in Tone

After departing Turkey, Trump softened his stance:

"I did have issues, and I still do, but Spain came back all the way today. Spain was very generous today."

Asked what Spain did to regain favor, Trump said the country "honored a request for lots of payments." It remains unclear what Spain specifically agreed to. Spain's U.S. embassy did not immediately respond to CNBC's request for comment.

Trade Context

Top Spanish exports to the U.S. include:

• Refined petroleum
• Pharmaceuticals
• Electrical transformers

Source: Observatory of Economic Complexity

This is not the first confrontation between Trump and Sánchez this year. In March, after the U.S. began its...