MADRID (Reuters) - The Trump administration has warned local suppliers to U.S. embassies and consulates as well as recipients of U.S. grants worldwide that they must comply with its ban on Diversity, Equity and Inclusion (DEI) programmes or risk losing payments.

"The U.S. embassy in Spain, like all of our embassies around the world, is communicating to our local suppliers of products and services the new framework based on the recent executive orders signed by President Trump," said a spokesperson for the U.S. Embassy in Spain.

"We want to ensure that our contracts comply with all federal anti-discrimination laws and that suppliers do not operate programmes that promote diversity, equity and inclusion in violation of existing federal laws," the spokesperson added.

The written warnings reflect U.S. President Donald Trump's ambition to extend outside the U.S. an executive order issued in January that directed government agency chiefs to dismantle DEI policies at federal agencies, federal contractors and in the private sector.

This has created a legal standoff back home, after years in which U.S. companies have embraced DEI policies that track race and ethnicity data and set diversity targets in hiring and other corporate practices.

According to the letter sent to companies outside the U.S., failure to submit the required information and confirm compliance will result in a freeze on payments.

Reuters has been unable to establish how many companies have received letters nor how much their combined contracts are worth.

But the anti-DEI pressure from Washington has highlighted the extraterritorial reach of U.S. policies and their potential impact on European corporate practices.

The U.S. State Department did not immediately return a request for comment on the letters containing the warning.

Other "America First" policies pursued by Trump have stoked economic and political tensions between the U.S. and Europe since his January 20 inauguration, at a time when his actions on tariffs and security ties have upended transatlantic relations.

Companies abroad with U.S. contracts have been told to confirm their compliance with Trump's crackdown on DEI in a questionnaire entitled "Certification Regarding Compliance With Applicable Federal Anti-Discrimination Law".

'FLAGRANT VIOLATION' OF LOCAL LAWS, SPAIN SAYS

The instructions are understood to have been sent to a wide range of firms including those supplying the homes of U.S. embassy staff with water, gas and electricity, to newspapers to which embassies subscribe, and catering suppliers.

The Spanish Labour Ministry said the American directive was a "flagrant violation" of Spain's strict anti-discrimination and diversity laws, and companies seeking to comply would face investigation by the Labour Inspectorate.

American Space Barcelona, based at the Spanish city's Sant Andreu municipal library, is one Spanish organisation to have received the letter as it includes a project that gets funding from the U.S. Embassy. The project provides English-language resources, cultural programmes and educational guidance and information about the United States.

Barcelona Mayor Jaume Collboni told local media the letter was part of a "reactionary avalanche" being driven by the Trump administration "against Europe and the democratic values that we defend".

Major German carmaker BMW has received a letter from the U.S. Embassy in Bulgaria to which it has sold vehicles, asking it to address questions to its DEI policy, a person familiar with the matter said.

In a statement to Reuters, BMW said it believes that "diverse perspectives and talents strengthen our company" and "contribute to increasing our innovative strength and competitiveness".

"Discrimination in any form has no place in our company," it said. "We will continue our activities on ESG (environmental, social and governance) topics as planned. We do not follow short-term trends in these areas either, but pursue a clear plan of moderation and balance."

Some French companies with U.S. government contracts have also been ordered to comply with Trump's DEI ban.

"American interference in the inclusion policies of French companies, along with threats of unjustified tariffs, is unacceptable," France's Ministry of Foreign Trade said in a statement sent to Reuters last week.