Trump president: a look into the Catalan-American trade relationship

Donald Trump's second mandate as president of the United States opens with signs of protectionist policies.  

An increase in tariffs targeting not only Mexico and Canada but the European Union could threaten the Catalan economy.  

Already in his first mandate, Trump had put new tariffs in place of 25% on European steel and 10% on aluminum. This time, his program proposes to apply general tariffs on all European products. 

With his 'America First' policy, Trump wants to bring back industries to the United States and to favor national production. Increasing tariffs would increase the prices for foreign companies to export to the US. 

Catalonia Trade & Investment (ACCIÓ), a public agency promoting business opportunities, evaluates the impact of Trump's policies to a loss of 0.2 points of the Catalan GDP. 

Catalan exports to the United States add up to €3.64 billion, with machinery and cosmetics being the most exported products. Those industries will be the most impacted by an increase in tariffs. 

Both imports and exports with the US have increased since 2020.  

Catalonia's main import from the US is fuel, standing at 30% of the overall imports from the States. Fuel prices could increase along with other imported products such as pharmaceuticals. 

Fuels from the US have gained weight in Catalonia's import due to the Ukraine war which triggered sanctions on Russia from the European Union. 

ACCIÓ says that Trump's policies would trigger inflation and strengthen the dollar, increasing expenses to those Catalan companies buying products in US dollars. This could end up raising the final price of the end product, translating into a loss of competitivity. 

Cristina Serradell, director of internationalization at ACCIÓ recommends that Catalan companies "anticipate" and "take the appropriate measures to mitigate vulnerabilities". 

Press play below to listen to our Filling the Sink podcast episode on Trump's trading tactics or subscribe on Apple Podcasts, YouTube or Spotify.

Consequences for Catalan companies 

The 3,100 Catalan companies exporting to the US could face different challenges. 

For some, the increase in tariffs would result in a loss of competitivity with rival firms, while other companies offering unique products could still benefit in maintaining a presence on the American market. 

For the machinery manufacturer Gesame, based in the inland municipality of Vic, the United States represent 15% of its sales. The tariffs "could mean an increase in the final price of our machine for the customer" Carles Acedo, CEO of Gesame said. 

However, the firm's competing companies are also from Europe, which doesn't put him at a "disadvantage," he explained. 

"If we were to find ourselves in a situation that slows our growth, we could consider the options of moving our assembly line" in the United States, Acedo added. 

Delocalizing a part of the production in the US could make the companies benefit from Trump's protectionist measures and tax benefits.  

For Pedro Aznar, professor at ESADE business school, Catalan companies should "take advantage of a positive economic environment" in the American market.  

"There are many ways in which a firm can leverage on other companies that already are in the United States," he said. 

Tariffs as a negotiation tool 

Donald Trump's lack of precision in his campaign on the tariffs he wishes to apply to the EU could open the door to negotiation. 

Aznar believes that the new policies could be the opportunity for the European Union to be more united and to negotiate with Donald Trump together. 

"European politicians need to be more together than ever because Donald Trump doesn't see the EU, he looks more at state level," he said. 

Trump "approaches the United States as he approaches business," Aznar explained, emphasizing on the necessity to negotiate and get leverage. 

"If the EU can make some concessions, it's going to be better than a direct confrontation," he said. 

The European Union could also diversify its trade partnerships, turning towards the South American alliance Mercosur, India or South Asia which are growing economies. 

Already looking towards Mexico or Malaysia, the EU and Mexico have already opened negotiations on updating a trade deal signed in 2000 to remove tariffs on food and agricultural products. 

As Trump also stated in his campaign and at his inauguration, he plans on increasing oil production which collides with the European Union environmental objectives of reaching a net-zero union by 2050.  

The differences in areas of production could be an opportunity for EU companies to boost their market shares in technology or renewable energy.