Spain Moves to Mitigate Impacts of New U.S. Tariffs

Summary

Minister of Agriculture, Fisheries, and Food Luis Planas reas­sured Spanish agri-food stake­hold­ers about the impact of U.S. tar­iffs, empha­siz­ing a €14.32 bil­lion sup­port plan and the E.U.-Mercosur agree­ment as poten­tial solu­tions. Spanish olive oil exports to the U.S. are not expected to be sig­nif­i­cantly affected by the tar­iffs, as declin­ing prices and high con­sump­tion in the U.S. mar­ket make Spanish olive oil attrac­tive despite poten­tial tar­iff impli­ca­tions.

At a meet­ing with lead­ing agri-food coop­er­a­tives and asso­ci­ated pro­duc­ers in Spain, Minister of Agriculture, Fisheries, and Food Luis Planas sought to reas­sure stake­hold­ers about the poten­tial impact of tar­iffs imposed by the United States.

Planas underlined that Madrid has already drafted a detailed eco­nomic sup­port plan worth €14.32 bil­lion to mit­i­gate the effects fol­low­ing the ini­tial announce­ment of the tar­iffs.

He acknowl­edged the uncer­tainty cre­ated by the announce­ment of 20 per­cent tar­iffs on April 2^nd, which was fol­lowed a week later by the tem­po­rary appli­ca­tion of a ten per­cent tar­iff last­ing 90 days.

“As a gov­ern­ment, we are work­ing to pro­vide direc­tion and cer­tainty,” he said, empha­siz­ing close col­lab­o­ra­tion with European Union part­ners to strengthen resilience and empower nego­ti­a­tions with the U.S.

Interestingly, Planas cited the E.U.-Mercosur agree­ment as an exam­ple of mar­ket diver­si­fi­ca­tion and expan­sion oppor­tu­ni­ties for agri-food pro­duc­ers.

The E.U.‘s free-trade agree­ment with Mercosur is gain­ing trac­tion across Europe fol­low­ing the announce­ment of new U.S. tar­iffs.

According to Planas, cru­cial Spanish export sec­tors, such as olive oil and wine, would greatly ben­e­fit if E.U. mem­bers approved the com­pre­hen­sive trade agree­ment with Latin American part­ners.

However, Rafael Pico, the exec­u­tive direc­tor of the Spanish olive oil indus­try and export asso­ci­a­tion Asoliva, recently told RTVE that the E.U.-Mercosur agree­ment would only allow a grad­ual reduc­tion of tar­iffs over a 15-year period.

“The Mercosur mar­ket is impor­tant, but it’s noth­ing like the United States, nei­ther in terms of vol­umes nor pur­chas­ing power,” he said.

“Per capita income in the United States sup­ports olive oil imports. Unfortunately, the same can­not be said for South American coun­tries. There is no viable alter­na­tive to the U.S. mar­ket,” Pico added.

Regarding over­all agri-food exports, Spain’s expo­sure to the U.S. mar­ket is rel­a­tively lim­ited.

In 2024, exports to the United States accounted for 4.8 per­cent of Spain’s total agri-food exports, total­ing approx­i­mately €4 bil­lion.

By com­par­i­son, Spanish agri-food pro­duc­ers exported sig­nif­i­cantly more to France in 2024: €11.5 bil­lion, which accounts for 15.3 per­cent of total agri-food exports.

In this con­text, olive oil rep­re­sents about 28 per­cent of all Spanish agri-food exports to the United States.

When it comes to olive oil specif­i­cally, the vol­ume of Spanish exports to the United States ranks sec­ond only to ship­ments sent to Italy.

In 2023, Spain’s Institute of Foreign Trade (ICEX) in New York esti­mated that Spanish olive oil ship­ments rep­re­sented approx­i­mately 41 per­cent of total U.S. olive oil imports.

According to European Union fig­ures, Spain exported more than 118,000 met­ric tons of olive oil directly to the U.S. in the 2023/24 crop year.

This fig­ure is expected to increase con­sid­er­ably in the cur­rent sea­son due to greater avail­abil­ity and lower prices.

Still, these vol­umes account only for direct ship­ments from Spain to the U.S. and do not include Spanish olive oil reach­ing the U.S. via other coun­tries.

In the 2021/22 crop year, direct exports of Spanish olive oil to the U.S. exceeded 160,000 tons.

“The new tar­iffs imposed by the United States are unlikely to have any sig­nif­i­cant impact on the Spanish olive oil sec­tor,” Juan Vilar, a strate­gic con­sul­tant for the olive oil sec­tor, told Olive Oil Times.

According to Vilar, there are sev­eral rel­e­vant trends to con­sider, pri­mar­ily the declin­ing olive oil prices.

“We are at the begin­ning of a cycle where pro­duc­tion exceeds demand. As a result, prices are grad­u­ally falling,” he said.

This trend means that Spanish olive oil will become cheaper on the U.S. mar­ket.

“American con­sumers who were pay­ing up to $22 per liter of olive oil over the past two years will now pay per­haps around $17,” Vilar said.

“They will not sig­nif­i­cantly feel the impact of the tar­iffs. Ultimately, con­sumers will still buy olive oil at lower prices than before, even with the full tar­iff applied,” he added.

According to Vilar, olive oil tar­iffs should be removed alto­gether.

“Olive oil is not strate­gi­cally impor­tant for the United States. It is more about con­sump­tion, which has grown sig­nif­i­cantly over recent decades,” he explained.

According to the International Olive Council (IOC), U.S. olive oil con­sump­tion in the cur­rent sea­son could approach 400,000 tons, sur­pass­ing Italy (395,000 tons) and near­ing Spain’s con­sump­tion (460,000 tons).

“American domes­tic olive oil pro­duc­tion cov­ers only a frac­tion of this demand, mak­ing the U.S. mar­ket very attrac­tive for Spanish pro­duc­ers,” Vilar added.

The IOC esti­mates that U.S. com­pa­nies pro­duced approx­i­mately 13,000 tons annu­ally over the past five years on aver­age.

“Spain is by far the largest olive oil pro­ducer in the world. Let’s also con­sider other EU pro­duc­ers and exporters, such as Italy and Greece, which are major exporters to the U.S. The E.U. will inevitably remain the most impor­tant olive oil trad­ing part­ner for the United States,” Vilar said.

“In such a sce­nario, the first to bear the cost of tar­iffs will be U.S. import com­pa­nies, fol­lowed by U.S. con­sumers, and even­tu­ally smaller Spanish exporters lack­ing bot­tling facil­i­ties in the U.S.,” he added.

Uncertainties remain not only about the tar­iffs but also regard­ing their scope. During the pre­vi­ous Trump admin­is­tra­tion, Spanish bot­tled olive oil was sub­ject to a 25-per­cent tar­iff, while bulk ship­ments remained unaf­fected.

“That sit­u­a­tion prompted large Spanish pro­duc­ers to estab­lish bot­tling facil­i­ties in the United States,” Vilar noted.

Luis Carlos Valero, man­ager and spokesper­son for the farm­ing asso­ci­a­tion ASAJA Jaén, warned of poten­tial con­se­quences if tar­iffs were applied to bulk ship­ments as well.

“If Trump also includes bulk olive oil, he would be shoot­ing him­self in the foot, as the entire dis­tri­b­u­tion and bot­tling indus­try is located in the United States,” Valero stated.

Vilar explained that of approx­i­mately 130,000 tons of olive oil Spain could export to the United States, only around 25,000 tons would be bot­tled, with the rest shipped in bulk.

Most bot­tled prod­ucts would orig­i­nate from smaller pro­duc­ers with­out exist­ing bot­tling facil­i­ties in the U.S.

“We need to under­stand the sit­u­a­tion clearly. We are at the start of a new Trump era. Right now, the best move is not to move at all,” Vilar con­cluded.