US President Donald Trump has upped the ante in the tariff war, issuing a stark warning to the European Union by threatening to impose a crippling 200% tariff on European wine, Champagne and spirits if the EU proceeds with its proposed tax on American whiskey.
In a move that was expected yet still shocking, Trump has taken umbrage at the EU’s decision to introduce counter-tariffs on certain US imports after he imposed similar measures.
The EU’s levies, unveiled on 13th March as a countermeasure to the steel and aluminium tariffs implemented by the Trump administration on 12th March, are set to take effect on 1st April.
In the wake of the news, Trump took to social media to warn of further escalation in his ongoing trade battle, which involves not only the EU but also many other nations around the world, asserting that he would not tolerate the planned 50% tax on American whiskey.
“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 E.U. REPRESENTED COUNTRIES,” stated Trump. “This will be great for the wine and Champagne businesses in the US.”
He also shared a clip from a press conference, in which he makes his stance on the situation clearer still. In the clip, Trump declares, “We’re going to take in hundreds of billions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money. I’m telling you—just watch.”
European Commission President Ursula von der Leyen addressed the ongoing issue on 13th March, announcing that the EU trade commissioner would be holding discussions with his US counterpart on 14th March.
“We don’t like tariffs because we think tariffs are taxes, and they are bad for business and bad for consumers,” said von der Leyen. “At the same time, we have always said we will defend our interests. We’ve said it, and we’ve shown it, but we are also open to negotiations.”
See more: EU to retaliate against US tariffs with sweeping countermeasures
Von der Leyen stated that as the US imposes tariffs amounting to €26 billion, the EU is preparing to implement retaliatory tariffs of the same sum. These EU tariffs extend beyond steel and aluminium, covering goods such as textiles, home appliances and agricultural products.
Trump’s tenure in the White House has been marked by frequent tariff disputes, with the US President arguing that such taxes on imports, while potentially painful in the short term, would ultimately boost domestic manufacturing and strengthen America’s global position. Meanwhile, the stock market has reflected public concerns regarding the tariffs and trade dispute, with the S&P 500 falling 1.4% on Thursday and European alcohol stocks also taking a hit.
The trade dispute over alcohol could have immediate consequences for consumers – price hikes could soon hit store shelves across both the EU and the US. If Trump follows through with his threat, the cost of a previously untaxed $15 bottle of Italian Prosecco could soar to $45. Similarly, the EU’s countermeasures will mean that a €30 bottle of bourbon in France could rise to €45.
In 2024, the US was the largest overseas market for French wines and spirits, with exports totalling €3.8 billion, a 5% increase from the previous year. Nevertheless, French wine producers are still reeling from the heavy losses incurred due to 25% tariffs in 2019, which led to a 40% drop in US sales and cost the sector €500 million.
A clash of tariffs and countermeasures
Despite growing concerns, European officials appear determined to resist pressure from Washington.
“D. Trump is escalating the trade war he has chosen to unleash,” shared Laurent Saint-Martin, France’s Minister Delegate for Foreign Trade, in a post on X. “France remains determined to retaliate with the European Commission and our partners. We will not give in to threats and will always protect our sectors.”
The latest tariff threats could also have repercussions for businesses that have previously supported Trump, such as France-based luxury goods company LVMH. The group’s CEO, Bernard Arnault, attended Trump’s inauguration in January. Relationships such as these raise questions about whether the broader corporate world will push back against trade policies that have rattled markets and stoked inflation fears.
Meanwhile, Trump has expressed his frustration with the EU’s approach, specifically criticising European policies that he believes unfairly target American companies.
“They are suing all of these companies, and they’re taking trillions of dollars out of American companies,” he said, referring to EU lawsuits and fines against major tech firms like Google and Meta. “And I guess they’re using it to run Europe or something.”
His administration has already imposed tariffs on Canada, Mexico and China, with plans to extend similar measures to the EU, Brazil and South Korea.
With tensions escalating between the economic powerhouses of the EU and the US, businesses and consumers on both sides of the Atlantic may soon feel the impact of this rapidly intensifying trade war.
Monaco Life is produced by real multi-media journalists writing original content. See more in our free newsletter, follow our Podcasts on Spotify, and check us out on Threads, Facebook, Instagram, LinkedIn and Tik Tok.
Photo credit: Vincenzo Iorio, Pexels