President Donald Trump threatened Thursday to impose 200% tariffs on alcohol from the European Union in response to the region’s retaliatory 50% tariff on U.S. whiskey, further escalating tensions between two longtime trading partners.
Trump also sharpened his rhetoric toward the E.U., which has for decades been one of the closest U.S. allies.
“The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky,” Trump wrote on Truth Social. “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. This will be great for the Wine and Champagne businesses in the U.S.”
A spokesperson for the European Commission said the region’s trade minister has already contacted his American counterparts and that “calls are being prepared.”
Later Thursday morning, Trump posted: “The U.S. doesn’t have Free Trade. We have ‘Stupid Trade.’ The Entire World is RIPPING US OFF!!!”
The U.S. remains the world’s largest importer of both wine and champagne, with the former comprising $4.9 billion in annual sales and the latter more than $1.7 billion. Meanwhile, U.S. exports of wine rank fifth among all nations at about $1 billion, while its exports of champagne and sparkling wine total just $67 million, 12th in the world.
The impact of the tit-for-tat tariffs could weigh heavily on U.S. consumers, who depend on import of the goods, than manufacturers of them.
In a statement, the Distilled Spirits Council of the United States, which represents alcohol makers here, called on the president to come to an agreement with the EU over the impasse, noting that neither region’s liquors have been subjected to tariffs for multiple decades.
“We urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs, which will create U.S. jobs and increase manufacturing and exports for the American hospitality sector. We want toasts not tariffs,” said Chris Swonger, Distilled Spirits Council President and CEO.
Trump has made wielding tariff threats against stalwart U.S. partners a core practice of his early second administration. The latest volley shows he has no plans to halt doing so despite protests from economists and businesses groups alike about the repercussions of such policy. On Wednesday, Trump’s largest tariffs regime — targeting all steel and aluminum imports into the U.S. — came into effect. In response, the E.U. and Canada announced they would impose retaliatory duties on U.S.-made products.
The president has repeatedly suggested the U.S.’s large trade deficit with the rest of the world is a sign of weakness. Trump has acknowledged that his tariffs strategy may lead to a period of “transition” for the U.S. economy, which has shown signs of wobbling in recent weeks, but that it will ultimately emerge stronger.
Thursday morning, Commerce Secretary Howard Lutnick added additional context to Trump’s latest barb and the EU specifically targeting products from states with strong Trump support.
“The President was totally annoyed that the Europeans did this, and so you’re going to hear back from someone who emotionally cares about America,” he said on Bloomberg Television. “He cares about America, and he wants to take care of Americans. And why are Europeans picking on Kentucky bourbon secretary, Harley Davidson motorcycle? It’s disrespectful.”
Lutnick added Trump was looking to “balance” trade relations with the E.U.
“We are your largest, most important trading partner. Treat us with respect, and let’s get a little balance,” he said.
So far, market reaction to Trump’s approach has been broadly negative. Major stock indexes have now erased their post-electoral gains, as investors rebel against the prospect of higher costs. On Thursday, stock futures immediately fell in response to Trump’s latest announcement, though pared losses somewhat after a favorable inflation report.
Most academics say that the ability of U.S. consumers and businesses alike to import goods cheaply mostly leads to higher living standards and more efficient output for companies.
Jean-Nicholas Fievet contributed.
