European Union Delays Retaliatory Tariffs Against U.S. Until Mid-April

What Happened?

The European Union has delayed its first retaliatory levies against the U.S. over President Donald Trump's steel and aluminum tariffs.

An EU spokesperson told CNBC Thursday that waiting until mid-April will allow extra weeks for negotiations with Washington.

'The change represents a slight adjustment to the timeline and does not diminish the impact of our response, in particular as the EU continues to prepare for retaliation of up to EUR 26 billion,' the spokesperson noted.

The EU previously announced duties on U.S. goods worth $28 billion after the Trump administration's 25% tariffs on metal imports.

A 2018 tariff measure by the EU was reportedly proposed to be brought back, impacting 4.5 billion euros ($4.9 billion) of U.S. products on April 1.

Another 18 billion euros of U.S. goods would be hit on April 13.

'We are now considering to align the timing of the two sets of EU counter-measures so we can consult with member states on both lists simultaneously,' European Trade Commissioner Maros Sefcovic said during a hearing at the European Parliament.

All countermeasures, including a 50% tariff on U.S. whisky, would take effect mid-April.

Why it Matters

President Donald Trump issued a warning of retaliatory tariffs on European alcohol.

In a post on Truth Social, Trump heavily criticized the EU as 'one of the most hostile and abusive taxing and tariffing authorities in the world.'

Trump suggested a 200% tariff on all wines, champagnes, and alcoholic products out of France and other EU countries would be implemented if the 50% measure was not removed.

Experts believe a 'tit-for-tat' escalation could easily get out of hand and result in a massive trade war.

Canada previously announced similar retaliatory duties in response to the U.S. moves on Canadian metal imports.

French Trade Minister Laurent Saint-Martin said last week that 'France remains determined to respond' with the EU and 'will not give in to threats.'

According to international trade data, alcoholic beverages are one of the EU’s top exports to the U.S.

The U.S. market is reportedly worth $4.3 billion annually for French exporters of wines and spirits.

Laurent Delaunay of the Burgundy Interprofessional Wine Bureau told The New York Times in an interview that a 200% tariff measure would be 'catastrophic' if imposed.

Others like Gabriel Picard of the Federation of Wine and Spirits Exporters said a 200% tax on European wines and spirits would mean an immediate halt to all U.S. shipments.

How it Affects You

The Trump administration plans to enact its reciprocal tariffs plan on April 2 to rebalance the global trading system.

Experts worry that the chances of a recession within the next 12 months have risen amid Trump's tariff policies.

The Federal Reserve expects the economy to grow more slowly than it anticipated three months ago amid 'high uncertainty.'

Although the president said his tariff moves would cause 'a little disturbance,' he wouldn't rule out the possibility of a recession.

A historic U.S. trade deficit remains a top priority for Trump.

But there's a chance some measures could do more harm than good amid inflation, consumer costs, and damage to key ally relationships.