Trump Threatens 200% Tariff on EU Alcohol Amid Escalating Trade Dispute
US President Donald Trump has threatened to impose a 200% tariff on alcohol imports from the European Union (EU) in response to the bloc’s planned 50% tax on US whiskey—the latest escalation in an ongoing trade war.
Tensions Over Whiskey and Steel Tariffs
The EU’s proposed tariff on American whiskey is a retaliation against Trump’s blanket tariffs on steel and aluminum, which took effect on Wednesday. The US president called for the immediate removal of what he described as the EU’s "nasty" whiskey tariff, accusing the bloc of being "hostile and abusive" toward the United States.
A European Commission spokesperson confirmed that discussions were being arranged between US and EU officials, with Trade Commissioner Maroš Šefčovič reaching out to his American counterparts.
Impact on the Alcohol Industry
The European wine industry, which exports over €4.5 billion ($4.89 billion) worth of wine annually to the US, is bracing for severe consequences if Trump’s threat materializes.
Ignacio Sánchez Recarte, Secretary-General of the Comité Européen des Entreprises Vins, warned that a 200% tariff would devastate the industry, resulting in massive job losses.
"There is no alternative market for all this wine," he said, urging both sides to keep the alcohol trade out of the dispute.
Tit-for-Tat Tariffs and Their Economic Fallout
The latest clash revives trade tensions from Trump’s first term, when his steel and aluminum tariffs prompted the EU to impose a 25% tax on US whiskey. This led to a 20% decline in whiskey exports to the EU, falling from $552 million in 2018 to $440 million in 2021, according to the Distilled Spirits Council of the US.
The tariffs were later lifted under Trump’s successor, following an agreement allowing limited exemptions on European metals. However, Trump now appears unwilling to negotiate, at least regarding steel and aluminum.
On social media, Trump doubled down, writing:
"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."
Businesses Sound the Alarm
The alcohol trade war threatens not only European producers but also US businesses that rely on imports.
Mary Taylor, a US-based importer of European wines, said the tariffs would be catastrophic, affecting restaurants, bars, and distributors.
"It just looks like a big, giant threat to our livelihoods," she said.
Taylor, who imports 2 million bottles per year, managed to adjust to Trump’s previous 25% tariff by expanding her European distribution. But she warned, "200% is a whole different ball game."
Stock Markets React
Global markets responded negatively to the trade tensions:
- The S&P 500 dropped 1.4%, falling 10% from its most recent peak—entering correction territory.
- The Dow Jones slumped 1.3%, while the Nasdaq fell almost 2%.
- In Europe, London’s FTSE 100 remained flat, Germany’s Dax dipped 0.5%, and Paris’ Cac 40 fell 0.6%.
- Major European alcohol brands took a hit: Pernod Ricard shares dropped 4%, while LVMH (Hennessy cognac maker) fell 1.1%.
White House and EU Officials Clash
The White House blamed the EU for escalating tensions. Commerce Secretary Howard Lutnick criticized the EU’s targeting of Kentucky bourbon and Harley-Davidson motorcycles, calling it "disrespectful".
Meanwhile, Treasury Secretary Scott Bessent dismissed fears of a full-blown trade war, arguing that the EU would suffer more than the US.
"One or two items, with one trading bloc – I'm not sure why that's a big deal for the markets," he said.
However, European Central Bank President Christine Lagarde warned that the EU had "no choice" but to retaliate.
"At the moment, everybody is positioning," she said, expressing hope that negotiations would eventually take place.
Could a Deal Be Reached?
Despite Trump’s hardline stance, some analysts believe the dispute will ultimately lead to a deal.
Stephen Moore, a former Trump adviser and now an economist at the Heritage Foundation, predicted that the EU would be forced to make concessions.
"Absolutely, this is going to end up with a deal. It's just a matter of whether it happens in a day, a week, a month, or six months," he said.
For now, the standoff continues—leaving businesses, markets, and workers caught in the middle of an intensifying trade battle.
