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President Demands Total Halt of US-Spain Commerce Due to NATO Funding Conflict

Published Jul 9, 2026
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Summary:
  • President Trump demanded that all trade with Spain be cut off after the country refused to commit to NATO's 5% of GDP defense spending target by 2035.
  • Spain spent 2.1% of its GDP on defense in 2025, up from 1.4% in 2021, but is the only NATO member that did not sign on to the 5% goal.
  • After Trump's comments, Spain's 10-year bond yield rose about 10 basis points to 3.5682%, and the Spanish IBEX 35 stock index fell 2.8%.

NATO Secretary-General Mark Rutte, sitting next to Trump, immediately defended Spain, noting its recent spending increase.

The dispute over defense spending is the latest in a series of transatlantic tensions since Trump returned to office. The U.S. president has long argued that European allies fail to contribute their fair share to NATO, and the 5% target represents a dramatic escalation of that demand. While some member states have increased budgets, few have come close to the new threshold, creating friction within the alliance.

Trump's Criticism and NATO's Defense

Trump delivered his comments during a press event held in Ankara, Turkey.

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He said, "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 added, "Don't even talk to them. They're hopeless, bad people."

The criticism stems from Spain's refusal to commit to NATO's new goal of spending 5% of gross domestic product on defense by 2035. Trump put forward the 5% benchmark - much higher than the alliance's existing 2% standard - as a means to push European nations to shoulder a larger portion of shared security costs. Many NATO members have resisted, arguing that such a high level is unrealistic and would require massive budget increases.

Spain, in particular, has prioritized social spending and has faced political hurdles to raising military expenditure further. The country's reluctance highlights ongoing tensions within the alliance over burden-sharing.

Rutte pushed back, saying, "You got Spain to pay 2%. They spent, they made a huge step in last year." Matthew Whitaker, the U.S. ambassador to NATO, described the tensions as "growing pains" and remarked, "I see these as just the challenges that we've worked through before."

The Spanish prime minister's office dismissed Trump's remarks as routine political rhetoric, emphasizing that the U.S.-Spain relationship provides advantages for both nations in commerce and security.

Market Reaction Hits Spain and Europe

Across Europe, the Stoxx 600 fell 1.9% as crude oil prices surged, partly in response to Trump's separate declaration that the ceasefire agreement with Iran was no longer in effect. Trump stated on Wednesday that he regards the Iran truce as "over."

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