The trench in retrench comes from the Latin truncare, to mutilate. Spanish tranquear means to make a big leap. Doesn't sound like they're related.

I think the cut back on expenditures meaning of retrench is a figurative meaning derived from the military idea of falling back and digging new trenches. I got thinking that the idea of waffling that Maurice mentions in the opening of this thread may derive from being limited in motion, being limited in ability to make that last step necessary for a commitment. Portuguese definitions of retranca include a blocking of a goal in soccer and category, identifying marker. The lovely ASp will get back with us on that latter Portuguese definition.