Trump says Spain should be 'punished' in second threat over Nato spend

"I think it's very disrespectful to Nato. In fact, I was thinking about giving them trade punishment through tariffs because of what they did, and I may do that," Trump told reporters at the White House.

Trump suggested last week that Spain be expelled from Nato over its failure to match the higher defence spending requirement.

"We had one laggard, it was Spain," Trump told reporters in the Oval Office. "They have no excuse not to do this, but that's all right. Maybe you should throw them out of Nato frankly."

READ MORE: Trump says Spain should be 'thrown out' of Nato over low defence spend

When he then met Pedro Sánchez on Monday in Egypt, the Spanish premier got plenty of mixed signals as the US leader first gave him the typically aggressive Trump handshake and later went on to say that Sánchez was doing "a fantastic job".

In June, the military alliance of 32 member states agreed to boost defence spending to five percent of annual economic output over the next decade under pressure from Trump.

But Spain, which was Nato's lowest defence spender in relative terms last year, insisted it would not need to hit the headline figure.

READ MORE: Is Spain's Nato defence spend really as low as Trump claims?

Sánchez has argued that Spain should meet its capacity objectives rather than fixed spending targets, including cybersecurity and the environment in his calculations.

After Trump's expulsion threat, government sources in Madrid said on Friday that "Spain is a committed and full member of NATO. And it meets its capacity targets as much as the United States."