US President Donald Trump has reignited trade tensions with the European Union by threatening to impose a 200% tariff on wines, champagnes, and other alcoholic products from France and the wider EU.
The move comes in retaliation to the bloc’s decision to impose a 50% tariff on American whiskey, further straining relations between the two economic giants.
European alcohol stocks tumble
Following Trump’s announcement, shares of leading European alcohol producers saw a sharp decline.
French spirits companies Pernod Ricard, Rémy Cointreau, and Italian drinks group Davide Campari all dropped more than 4%.
Luxury conglomerate LVMH, which owns renowned brands such as Moët & Chandon and Hennessy, also dipped by more than 0.8%.
However, British drinks giant Diageo, the owner of Johnnie Walker and Guinness, experienced a more modest decline of just 0.12%.
The market reaction reflects growing anxiety over the potential financial blow to European alcohol exports, particularly in the premium wine and spirits segment, which relies heavily on the American market.
Retaliatory move against EU whiskey tariffs
Trump’s tariff threat comes in response to the EU’s recent decision to slap a 50% tariff on US whiskey, which was part of the bloc’s retaliation against American tariffs on steel and aluminum.
The EU’s measures are set to be implemented in two phases, with the first wave targeting iconic American products like Kentucky bourbon and Harley-Davidson motorcycles.
A second wave, expected in mid-April, will focus on farm products and industrial goods from key Republican districts.
In a social media post, Trump labeled the EU as “hostile and abusive” and warned that the 200% tariff would take effect unless the EU promptly removed its whiskey tariffs.
“If this tariff is not removed immediately, the US will shortly place a 200 percent tariff on all wines, Champagnes, and alcoholic products coming out of France and other EU represented countries,” Trump wrote on social media on Thursday.
A history of trade disputes
This is not the first time the alcohol industry has been caught in the crossfire of a US-EU trade war.
During Trump’s first term, the US imposed tariffs on European liquor, which led to a significant drop in American whiskey exports to the EU.
According to the Distilled Spirits Council of the United States, exports fell by 20% over the following three years.
Despite efforts by industry executives to lobby against the latest round of tariffs, there appears to be little hope for an immediate resolution.
Ulrich Adam, director general of spiritsEurope, described Trump’s threat as a “shocker” and called for alcoholic beverages to be excluded from unrelated trade disputes.
Impact on the European alcohol market
The US is a critical market for European wines and spirits.
In 2024, the US imported $1.23 billion worth of distilled spirits from the EU, while American whiskey exports to Europe reached $699 million.
France’s Champagne industry, in particular, relies heavily on the US, with 16% of its total exports heading to American shores.
The tariff threat has raised concerns about the financial impact on European producers and the potential for prolonged instability in trans-Atlantic trade relations.
While Trump’s previous tariff threats on Champagne did not materialize, industry experts fear that this time the president may follow through.
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