Trump threatens 200% tariff on EU wine

US President Donald Trump has stirred up fresh trade tensions by threatening a 200 per cent tariff on European wine, champagne, and other alcoholic beverages, marking the latest chapter in an ongoing trade dispute between the United States and the European Union.

This bold move, posted on Mr Trump’s social media on Thursday (today), comes as retaliation against the EU’s plans to impose taxes on American whiskey, which were introduced in response to the US’s recent tariffs on steel and aluminium.

“If this Tariff is not removed immediately, the U.S. will shortly place a 200 per cent Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES,” Mr Trump declared in his post. He added that the measure would be a boon for the American wine and champagne businesses, suggesting the tariffs would bolster domestic production and sales.

Mr Trump’s rhetoric, while still a threat, has sent shockwaves through European markets. Shares of major European beverage companies, including LVMH (owner of iconic champagne brands Moët & Chandon and Veuve Clicquot), saw declines. Cognac producer Remy Cointreau dropped 4.5 per cent, and Pernod Ricard, known for its spirits, fell 3.6 per cent. These declines reflect the anxiety brewing among producers and investors about the potential impact of such punitive tariffs.

The data

In 2022, production of wine in the EU amounted to 16.1 billion litres.  

The top three wine producers accounted for 83 per cent of EU production. Italy and Spain each contributed nearly five billion litres, representing together 62 per cent of the total sold production in the EU, while France produced 3.4 billion litres, 20 per cent. Other producers exceeding one per cent of the EU total were Germany (four per cent), Portugal (above two per cent), and Hungary (below two per cent). 

In the same year, EU members exported 7.2  billion litres of wine. Almost half  (44 per cent) was exported to countries outside of the EU. Most of the wine was exported to the United Kingdom (23 per cent), followed by the United States (22 per cent), Russia (nine per cent) and Canada (six per cent).

Why did Mr Trump retaliate?

The backdrop to this conflict lies in the EU’s retaliatory measures to counter US tariffs on metals. In response, the EU has proposed duties on American products worth up to €26 billion ($28.3 billion). Mr Trump’s current threat on wine follows a broader US strategy of imposing tariffs on various goods, including agricultural products, with the potential for even more aggressive measures in the coming weeks.

The Trump administration has also signalled it will continue expanding tariffs across other industries, including automobiles, pharmaceuticals, and semiconductors. The White House has indicated that these new duties could roll out soon, based on calculations of other countries’ tariffs and trade barriers.

As tensions rise, the US and the EU appear to be heading for a trade standoff, with each side preparing countermeasures that could further escalate the situation. The European Union, in response to US tariffs, is considering additional retaliatory actions, including measures on agricultural and industrial goods.

While the President’s 200 per cent tariff threat has yet to materialize into policy, the mere possibility of such a steep duty on European wines is a bitter pill for many in the wine and spirits industry, who are already grappling with the effects of previous trade wars. As this tariff battle simmers, all eyes will be on the White House to see if this threat turns into reality or if it’s yet another twist in the unpredictable saga of US-EU trade relations.