Bank of Spain Sounds Alarm Over U.S. Tariffs' Economic Implications
(MENAFN) The Bank of Spain has raised concerns about the economic implications of recently implemented U.S. tariffs, although it expects the overall effect to be limited.
In its annual report released on Tuesday, the central bank noted that Spain remains vulnerable to the risks posed by escalating global trade tensions. Separately, BBVA Research, the economic analysis arm of Spanish banking group Banco Bilbao Vizcaya Argentaria (BBVA), forecasted that the new tariffs could reduce Spain's GDP growth by 0.3 percent in 2025.
While the central bank deemed the situation manageable, it warned that prolonged trade conflicts could increase market volatility and erode consumer confidence.
The report highlighted Spain’s economic integration into global value chains, particularly its role in supplying components to U.S. industries, which leaves it susceptible to indirect effects from tariffs. It also noted that key Spanish exports, such as wine and olive oil, could see reduced demand as American consumers opt for cheaper alternatives.
To mitigate the worst effects, the bank pointed to the potential for trade diversion. A slowdown in global economic activity could lead to Spain and other EU nations taking over goods redirected from the U.S. market.
Tourism is another concern. A deceleration in the U.S. economy, along with a weaker dollar making European travel more expensive, could result in fewer American visitors to Spain. The U.S. remains the largest non-European source of high-spending tourists to the country.
The report revealed that Spanish exporters now face average tariffs of about 12 percent on their goods sent to the U.S., up from 3 percent two years ago. Should the reciprocal tariffs announced by President Donald Trump on April 2 come into effect, this could rise to approximately 18 percent.
The Bank of Spain also warned that these tariffs are likely to lead to higher consumer prices in the U.S., contributing to domestic inflation.
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