President Donald Trump has threatened to impose a 200% tariff on EU alcohol in retaliation to the European Union’s recent tariff hike on American spirits, intensifying an already volatile trade war.
Retaliation Over Steel and Aluminum Tariffs
The trade dispute escalated following the EU’s decision to impose a 50% tariff on American spirits, a response to Trump’s 25% tariffs on aluminum and steel that took effect on Wednesday. In a post on Truth Social, Trump warned that unless the EU rescinded its new tariff, the U.S. would impose heavy duties on wines, champagnes, and other alcoholic products from France and other EU nations.
“If this tariff is not removed immediately, the U.S. will shortly place a 200% tariff on all wines, champagnes, & alcoholic products coming out of France and other E.U.-represented countries,” Trump stated, adding that this move would benefit the domestic wine and champagne industries.
EU’s Response and Market Impact
The European Commission justified its countermeasures, imposing tariffs on €26 billion worth of U.S. goods, including boats, bourbon, and motorbikes. The tariffs, scheduled to take effect in April, were deemed “swift and proportionate” by EU officials.
Market reactions were swift, with the S&P 500 index sliding into correction territory, down 10% from its recent all-time high. The U.S. spirits industry voiced concerns, warning that the retaliatory tariffs could further damage businesses and jobs.
France Vows to ‘Fight Back’
France, the largest wine exporter to the U.S., shipping $2.5 billion worth of wine last year, vowed not to back down. French Trade Minister Laurent Saint-Martin accused Trump of escalating the conflict and pledged that France would ‘fight back.’
“We will not give in to threats and will always protect our industries,” Saint-Martin wrote on X (formerly Twitter).
Olof Gill, the EU Commission’s trade spokesperson, urged the U.S. to revoke its steel and aluminum tariffs, emphasizing the need for negotiations rather than further escalation. He warned that tariffs lead to “lose-lose outcomes” and called for dialogue between U.S. and EU officials to de-escalate tensions.
Potential Industry Fallout
Alcoholic beverages remain one of the EU’s top exports to the U.S. France exported nearly 27 million bottles of Champagne to the U.S. in 2023, making it the largest export market for the beverage. The Irish Whiskey Association warned that tariffs could have a ‘devastating’ impact on jobs and investments in the sector.
“There is no winner in a trade war,” the association stated, highlighting the importance of the U.S. as its biggest trading partner.
Economists predict that if Trump’s proposed 200% tariffs take effect, French wine imports to the U.S. could plummet. “Your liquor store probably won’t stock it,” Justin Wolfers, a University of Michigan economist, told CNN, suggesting that imports could drop to near zero.
Trump’s Defiant Stance
During a meeting with Irish Taoiseach Micheál Martin, Trump reaffirmed his intention to retaliate against the EU’s tariffs.
“Of course, I will respond,” Trump said, accusing the EU of being “one of the most hostile and abusive taxing and tariffing authorities in the world.”
Trump’s aggressive trade policies have sparked backlash from Wall Street, but he remains resolute in his stance. Treasury Secretary Scott Bessent indicated that additional tariffs, including those on the auto industry, could be imposed.
Calls for Resolution
The U.S. spirits industry has urged de-escalation. “We want toasts, not tariffs,” said Chris Swonger, CEO of the Distilled Spirits Council of the United States. He noted that the U.S. and EU spirits industries have maintained a ‘zero-for-zero’ tariff agreement since 1997 and warned that the new tariffs could severely impact exports.
Meanwhile, Canada has approached the World Trade Organization (WTO) regarding the U.S. steel and aluminum tariffs, arguing that they violate trade agreements.
The Unione Italiana Vini, representing Italian winemakers, projected that Trump’s proposed tariffs could cost the industry €1 billion, further straining transatlantic trade relations.
ENERGY INDUSTRY | Dangote Refinery Boosts International Crude Imports to Meet Local Deliveries
