In an escalating trade conflict, US President Donald Trump has threatened to impose a 200% tariff on all alcohol imports from the European Union (EU). This threat is a direct response to the EU’s plans to implement a 50% tax on US-produced whiskey, a retaliatory measure against Trump’s tariffs on steel and aluminum imports to the US.
The US president demanded the immediate removal of the EU’s “nasty” tariff on US whiskey, labeling the bloc “hostile and abusive” and “formed for the sole purpose of taking advantage of the United States.”
A European Commission spokesperson confirmed that “calls are being prepared” between the US and the EU to address the situation, stating that Trade Commissioner Maroš Šefčovič had “reached out to his American counterparts” following Trump’s latest threat.
This standoff marks a further escalation of a trade war that has unsettled financial markets and raised concerns about the impact on economies and consumers worldwide, including in the US.
Europe exports over €4.5 billion ($4.89 billion; £3.78 billion) worth of wine annually to the US, its largest export market, according to the Comité Européen des Entreprises Vins. Ignacio Sánchez Recarte, the group’s secretary-general, warned that Trump’s threats could devastate the market and cost thousands of jobs. “There is no alternative to sell all this wine,” he said, urging both sides to “keep wine out of this fight.”
The latest clash follows the implementation of new US tariffs on steel and aluminum, imposing a 25% duty and ending previous exemptions for certain countries, including the EU and Canada. Canada and Europe, major US trade partners, condemned the new taxes as unjustified and responded with their own tariffs on various US products. The EU’s measures are set to take effect on April 1.
This confrontation echoes a previous dispute during Trump’s first term, when he initially imposed tariffs on steel and aluminum. The EU retaliated with tariffs, including a 25% tax on American whiskey, leading to a 20% drop in whiskey sales to the EU. The tariffs were later lifted following an agreement that exempted certain amounts of European metals from the duties.
However, Trump has shown limited interest in deal-making regarding steel and aluminum. “If this Tariff is not removed immediately, the US will shortly place a 200% Tariff on all wines, champagnes & alcoholic products coming out of France and other EU represented countries,” he wrote on social media, emphasizing portions of the message with capital letters.
The targeting of wine and whiskey is symbolic, as these products are iconic consumer goods. While the value of the drinks trade is less than that of other tariffed items, the impact on businesses is significant. Mary Taylor, a US-based importer of European wines, described the potential measures as “a big, giant threat to our livelihoods,” warning of catastrophic consequences for her business and the industry.
Ms. Taylor, who imports 2 million bottles annually, managed to navigate the 25% tariff imposed during Trump’s first term by expanding her European distribution, but stated, “200% is a whole different ball game.”
Financial markets reacted negatively, with US shares falling on Thursday. The S&P 500 dropped nearly 1.4%, marking a 10% decline from its recent peak, known as a correction. The Dow and Nasdaq also experienced significant drops. In Europe, shares of major spirit-makers, such as Pernod Ricard and LVMH, were affected.
White House officials attributed the escalating dispute to the EU. Commerce Secretary Howard Lutnick criticized the EU for “picking on Kentucky bourbon or Harley-Davidson motorcycles,” while Treasury Secretary Scott Bessent downplayed concerns about a spiraling trade war.
European Central Bank President Christine Lagarde, in an interview with the BBC, stated that the EU had “no choice” but to retaliate, predicting that “everybody will suffer” if the dispute escalates.
Trump has shown little tolerance for retaliation, previously threatening Canada with a 50% tariff on steel and aluminum. Former Trump adviser Stephen Moore believes the situation will ultimately lead to a negotiated settlement, suggesting that the EU will likely make concessions.
