Spain's Prime Minister Pedro Sanchez greets President Donald Trump in Sharm el-Sheikh, Egypt, on Oct. 13, 2025. —EVAN VUCCI––Getty ImagesPresident Donald Trump’s revived threat to cut off trade with Spain has raised grave concerns and questions about U.S.-Europe trade relations.At the NATO summit in Turkey on Wednesday, Trump told Treasury Secretary Scott Bessent to “cut off all trade with Spain, please, including visits,” while accusing the country of being a “terrible partner in NATO.”Spanish Prime Minister Pedro Sánchez later downplayed the incident after the two leaders met informally during the summit, telling reporters there was “no tension.”Trump himself seemed to strike a more conciliatory tone when returning from the summit."I will say, I did have issues with Spain, and I still do, but Spain came back all the way today. Spain was very generous today, you know, I told them I was going to stop trading,” he said aboard Air Force One.When asked about Spain’s “generosity,” Trump responded: “They honored a request for lots of payment, and if they didn't, we wouldn't even talk to them."Trump appeared to be referencing Spain complying with NATO's old defense spending target of 2% of GDP—something NATO Secretary General Mark Rutte championed at the summit.Reports circulating Wednesday said the Treasury Department was working alongside the U.S. Trade Representative and the Commerce Department to prepare Trump with “a menu of Spanish products that may be embargoed in the coming days.”TIME has reached out to the White House and Treasury Department for comment.U.S. Trade Representative Jamieson Greer on Thursday told reporters that the President “for sure can” use the International Emergency Economic Powers Act (IEEPA) to limit trade with other countries.Greer said the Supreme Court’s tariff decision earlier this year, which ruled that Trump lacked the authority to impose sweeping import taxes by claiming a national emergency, highlighted “that IEEPA clearly says you can prohibit trade, you can do certain things.”However, the trade official said Trump may no longer want to explore that measure after he and Sánchez had shared a “good meeting.”Any move to restrict trade would likely carry major economic consequences. Total goods trade between the United States and Spain reached $47.9 billion in 2025 according to U.S. Census Bureau data.Tensions between the two countries mounted last year with Spain's refusal to commit to investing 5% of GDP annually on defense by 2035, after other member states agreed to the target at last year's summit.Months later, in October, Trump said he was “very unhappy with Spain” and admitted he was “thinking of giving them trade punishment through tariffs, because of what they did.”His threat did not materialize. Relations further splintered in the fallout of the Iran war—a military operation Sánchez has repeatedly denounced. Spain notably denied the U.S. access to joint military bases for offensive operations and closed its airspace to American aircraft involved in the conflict.Trump lambasted Spain’s position during a March Oval Office briefing and threatened to cut trade with Spain, but did not follow through.Trump also threatened to withdraw U.S. troops from Spain and Italy, arguing both countries had failed to support the United States during the conflict with Iran.Any form of trade embargo would represent the most significant escalation yet, not only in relations with Spain, but also with the European Union, whose institutions negotiate trade policy on behalf of all 27 member states.The European Union's side of a trade deal struck with the U.S. last year came into effect on July 1.In response to Trump's latest threat, European Commission deputy chief spokesperson Olof Gill said “we expect the U.S. to honor its commitments... as we have honored ours."Even if Trump does push forward with his grievance against Spain, can he really cut all trade with the European country? TIME spoke to legal and trade experts to find out. Does Trump have the power to cut off all trade with Spain?There are various legal tools that could allow the President to significantly restrict or suspend all trade between Washington and Madrid, experts tell TIME. One of the broadest is the IEEPA, mentioned by Greer, which allows Presidents, after declaring a national emergency regarding an “unusual or extraordinary threat” under the National Emergencies Act, to regulate or prohibit a wide range of international economic transitions.Kathleen Claussen, a professor of law at Georgetown Law, tells TIME that the statute could provide Trump with the authority to suspend trade with Spain.“First, he declares a national emergency, and then he imposes the embargo,” she says. “Under IEEPA, once you declare a national emergency, with respect to some threat from a foreign source, that unlocks the power to do all those verbs that are in the statute.”According to the statue, the law allows a President to “investigate, regulate, or prohibit” transactions involving foreign exchange and imports or exports.Claussen notes that the Supreme Court's tariff ruling earlier this year may have limited Trump's authority over levies, but it also reaffirmed the breadth of IEEPA.“In the context of the tariff case of earlier this year, the Supreme Court actually reminded [Trump] that he has this power in Justice [Brett] Kavanaugh's dissent,” she says."The plaintiffs and the Court do not dispute that the President can act in declared emergencies under IEEPA to impose quotas or even total embargoes on all imports from a given country. But the President supposedly cannot take the far more modest step of conditioning those imports on payment of a tariff or duty,” read Kavanaugh’s dissent.After the Supreme Court’s decision, Trump argued that the outcome had granted him even greater powers, despite striking down his tariffs.“I am allowed to cut off any and all trade or business with that same country. In other words, I can destroy the trade. I can destroy the country. I'm even allowed to impose a foreign country-destroying embargo. I can embargo,” he claimed. Asked whether the Spain row could plausibly constitute a national security emergency, Claussen says U.S. courts generally “tend to defer to the executive branch when it comes to those security questions.”She cautions that an embargo is only one option available to Trump.“The fact of the matter is, the President has been given a great deal of authority with respect to economic security matters from the Congress,” she says, noting that such authority could include tariffs, sanctions, import fees, or restrictions on services and other commercial authorizations regarding Spain.Would a trade embargo violate the E.U.-U.S. trade agreement?While Trump could legally impose trade restrictions under U.S. law, doing so would risk violating the spirit of the Turnberry agreement, experts note.The European Union agreed to eliminate tariffs on U.S. industrial goods, while the United States agreed to impose a baseline tariff of 15% on most goods imported from the European Union, with some sector-specific exceptions.Maria Demertzis, professor of economic policy at the European University Institute, notes that the trade policy was negotiated collectively by Brussels rather than individual member states.She argues that a trade embargo with Spain would be in direct conflict with the framework of this agreement, as it would single out a single member state.Claussen, however, says that the Turnberry agreement is a political deal, not a legal one.“We don't have any legally-binding text, and even if we did, there's nothing to stop the President from changing the terms, apart from the maintenance of the relationship [with the E.U.],” she notes.The Administration has already undermined the agreement in many ways, experts tell TIME, citing the discord in February, when the bloc had to freeze the implementation of the agreement after Trump made additional tariff threats. Even if Trump has the legal authority, experts question whether an embargo could work in practice.Demertzis points out that the European Union is designed to function as a single market, with no internal trade barriers.“You cannot block trade with Spain, because Spain can still import from the U.S. via France,” she argues.How could the European Union respond?While the E.U. cannot stop the President from cutting trade relations with Spain, they have a series of measures they could take, but experts warn the bloc may not have the political capital to implement these.Brussels would first pursue a diplomatic solution, Demertzis says, predicting that “the E.U. would continue to fight for what is in agreement” by appealing to Trump to honor the deal.If this fails, the European Commission has possible ways it could retaliate. “They have all the tools to confront the United States on a sort of equal ground on this,” says Jeremy Shapiro, research director of the U.S. Programme at the European Council on Foreign Relations. “In particular, they have a very strong norm within the E.U. that people treat the single market equally, trade partners are not supposed to discriminate against [individual countries].”A response to such discrimination could include retaliatory tariffs targeting politically sensitive sectors of the U.S. economy.However, Demertzis is skeptical the dispute would even escalate that far.“The E.U. will not retaliate because the E.U. is quite uncomfortable about the dependencies on the U.S., primarily militarily,” she insists.That military dependence has remained central to Trump's leverage. Throughout the fallout from the Iran war, he has repeatedly threatened to withdraw troops from European countries after allies refused to get actively involved in the conflict.In June, Washington told allies it would be scaling back the number of military assets it dedicates to the alliance—an attempt to remedy an "unhealthy co-dependence in the NATO Force Model on U.S. forces,” according to NATO's top commander, U.S. Air Force General Alexus Grynkewich.Weeks later, U.S. Defense Secretary Pete Hegseth announced a review of U.S. military troops in Europe during a critical address to NATO defense ministers.