President Donald Trump has ordered officials to prepare a potential sweeping trade embargo against Spain, dramatically escalating a dispute over the country’s defense spending.

In a directive issued Wednesday, Trump instructed Treasury Secretary Scott Bessent to “cut off all trade … including visits” with Spain, while ordering officials to draw up a list of Spanish products that could be blocked in the coming days.

U.S. officials said the Treasury Department, Commerce Department and U.S. Trade Representative are preparing “a menu” of products that could face restrictions, suggesting any embargo could begin with targeted industries rather than an outright ban.

Legal experts say Trump could attempt to invoke the International Emergency Economic Powers Act (IEEPA), a law typically used to impose sanctions on countries such as Iran, Russia and North Korea. To do so, he would need to declare a national emergency involving an “unusual or extraordinary threat” to the United States.

“It’s hard to see” how Spain, a NATO ally, meets that threshold, said Peter Shane, a law professor at New York University. But former Senate trade counsel Mayur Patel said the law could still give Trump authority to impose an embargo, even if it is later challenged in court.

The economic stakes are high.

The U.S. and Spain traded $47.9 billion in goods last year, rising to $74.5 billion when services such as tourism are included. Spain is America’s 23rd-largest trading partner, while the U.S. runs a trade surplus with the country.

An embargo could disrupt imports, including pharmaceuticals, olive oil, cosmetics, and electrical equipment, while also affecting U.S. exports, such as crude oil, aircraft, and medicines.

It could also shake investment on both sides of the Atlantic. Spanish companies have invested more than $111 billion in the United States, while American firms have invested more than $132 billion in Spain, supporting roughly 200,000 jobs.

Trump’s order also raised questions about travel. It remains unclear what he meant by cutting off “visits,” or whether any restrictions would apply to tourists, business travelers or athletes. More than 4.4 million Americans visited Spain last year, making them one of the country’s biggest sources of tourism revenue.

If a full embargo proves legally difficult, Trump has other options, including targeted sanctions, national-security trade restrictions, and anti-dumping measures against specific Spanish products.

The dispute comes after Trump repeatedly criticized Spain for refusing to meet his preferred NATO defense spending target. He first threatened trade action last year and, in March, ordered officials to examine an embargo on Spanish goods.

Spain plans to spend about 2% of GDP on defense in 2026, well below Trump’s preferred 5% target, despite sharply increasing military spending in recent years and providing billions of euros in aid to Ukraine.