The Biden-Harris Administration, a greater opportunity for Spanish companies
On 20 December last year we lived through a historic moment that will change the social and economic reality of many countries: the arrival of Joe Biden to the presidency of the White House. The new US president is embarked on an enormous task, namely to reduce trade tension based on tariffs between the US and Europe, a policy that has affected Spanish foreign trade and its business opportunities abroad.
All these facts generate new expectations in terms of improving trade relations with many countries, such as Spain, which is hoping for an attitude of dialogue from the new Administration so that its exports will once again be viable and able to compete on US soil.
As a sign of this transition, Banco Sabadell has held a Cycle of International Business Conferences focused on the main markets of interest for Spanish companies, with the aim of obtaining expert advice so that companies can successfully advance their activity abroad. This last session focused on the United States of America, as the world's leading economic power, which is in the midst of a process of reorientation of its trade policies following the inauguration of the Biden-Harris administration. The conference was led by Mario González, Investment Director, Banco Sabadell USA, and Mario Velo, Corporate and Middle Market Director, Banco Sabadell USA.
The analysis of the first 100 days of the Biden-Harris administration was the main topic, as well as its impact on the world economy, the effects of the elimination of tariffs and the new focus on fiscal policy versus monetary policy, as well as the opportunities offered to Spanish companies, emphasising the role of Banco Sabadell in helping companies to grow in this market.
Mario Velo emphasised the importance of the suspension of tariffs. He expressed the good news for Spanish exporting companies, especially in the food sector. In early March, the United States and the European Union agreed to temporarily suspend tariffs of 25% on wine, olive oil and Manchego cheese, following an agreement between the US President, Joe Biden, and the President of the European Commission, Ursula von der Leyen. Recalling that at the end of 2019, former US President Donald Trump decreed an increase in tariffs. The origin of this increase in tariffs lay in the trade dispute between Boeing and Airbus. But the tariffs were not only applied to aeronautical products, but also to food products, and to countries where Airbus is present, such as Spain, France, Germany and the United Kingdom. The tariffs affected many sectors, including the Spanish oil sector, which was hit with tariffs of 25%.
In the business sphere, Spain and the US maintain solid bilateral trade relations. In 2019 it was the sixth largest destination for Spanish exports and the fifth largest supplier. In 2020, as could not be otherwise, trade flows between the two countries "have deteriorated notably". Even so, as of November 2020, the bilateral balance stood at 2,217 million euros, favourable for Spain. Foreign sector firms face a very saturated and competitive market in the US, marked by the presence of numerous long-established international companies, as expressed by investment director Mario Velo.
Banco Sabadell is positioned as one of the bridges between Spanish companies and the US market. In the opinion of the speakers, "Spanish companies are very well established in the American market, especially in sectors such as agri-food, consumer goods, industrial technology, renewable energy and transport infrastructures, with regular investments and exports". They therefore see "good prospects for all of them, especially as soon as growth picks up again". Although they qualify the difficulty of suggesting strategies to companies that know and work daily in this market, where in many cases, they already act as local companies, for them the key lies in the mentality, in valuing the importance of establishing themselves in the country with a medium and long term focus through investment and the search for synergies with their American partners.
During the round of questions, the new commercial and political relations with Cuba during the Biden-Harris administration were considered. The opinion of the speakers was favourable and positioned Spain and Spanish companies as relevant actors in this political transition of rapprochement.
Furthermore, great importance was given to COVID-19 and the evolution of the pandemic, which has improved notably since the beginning of the year, according to the speakers. New cases, hospitalisations and deaths are at a record low since October/November. The United States is one of the most advanced countries in the vaccination process, with about 30% of the population having already received at least one dose of the COVID-19 vaccine and the entire adult population is expected to be eligible for vaccination in May. This improved situation, together with the new Administration, poses a favourable scenario for Spanish companies in all sectors, both in their current and future trade relations with the United States.