Bank of Spain warns of potential economic impact from US tariffs

MADRID - The Bank of Spain has warned that recently imposed US tariffs may weigh on the country's economic growth, although the overall impact is expected to be limited.

In its annual report released Tuesday, the central bank said that Spain remains exposed to the risks of heightened global trade tensions. Separately, BBVA Research, the economic analysis unit of Spanish lender Banco Bilbao Vizcaya Argentaria (BBVA), projected that the new tariffs could reduce Spain's gross domestic product growth by 0.3 percent in 2025.

While describing the situation as manageable, the bank cautioned that a prolonged trade conflict could increase market uncertainty and damage consumer confidence.

The report noted that Spain's economy, which is tightly integrated into global value chains, is particularly so through its role in producing components for the US industries. This makes it vulnerable to the indirect effects of tariffs. Key exports of Spanish products, such as wine and olive oil, could suffer as American consumers shift to more affordable alternatives.

The bank stated that the worst effects could be mitigated by trade diversion. Lower global economic activities might also result in Spain and other EU countries replacing goods redirected away from the US market.

Tourism is also at risk. A slowdown in the US economy - along with a weaker dollar making travel to Europe more expensive - could lead to a drop in the number of American visitors, the report said. The United States is the largest non-European source of high-spending tourists to Spain.

According to the report, Spanish companies now face average tariffs of around 12 percent on exports to the United States, up from 3 percent two years ago. If the reciprocal tariffs announced by US President Donald Trump on April 2 take effect, the rate could rise to approximately 18 percent.

The Bank of Spain also warned that the tariffs would likely lead to higher consumer prices in the United States, contributing to domestic inflation.