Trump Threatens 200% Retaliatory Tariff on European Alcohol

What Happened?

President Donald Trump has many wine and spirit exporters concerned after issuing a warning of retaliatory tariffs on European alcohol.

Trump’s warning comes after the European Union retaliated against his imposed steel and aluminum tariff measure which took effect.

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.'

He alleged the EU was formed for the sole purpose of taking advantage of the U.S. after a 50% tariff was placed on whisky.

'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,' Trump said. 'This will be great for the Wine and Champagne businesses in the U.S.'

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

The EU recently announced duties on U.S. goods worth $28 billion after the Trump administration's tariff moves on metal imports.

Canada announced similar retaliatory duties in response to the U.S. moves on Canadian steel and aluminum imports.

'Trump is escalating the trade war he has chosen to unleash,' French Trade Minister Laurent Saint-Martin said Thursday.

He added that 'France remains determined to respond' with the EU and 'will not give in to threats.'

EU trade spokesperson Olof Gill told CNN that 'calls are being prepared' between EU trade officials and their US counterparts.

Why it Matters

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

Gabriel Picard, chairman of the Federation of Wine and Spirits Exporters, told French media on Thursday that 'a 200 percent tax on European wines and spirits would mean an immediate halt to all shipments to the United States.'

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

'The United States is our biggest market,' said Laurent Delaunay, the president of the Burgundy Interprofessional Wine Bureau. 'We have business relations that go back years.'

Delaunay added in an interview with The New York Times that a 200% tariff measure would be 'catastrophic' if imposed.

How it Affects You

While Trump has stated his tariff policies would cause 'a little disturbance,' the chances of a recession within the next 12 months have risen.

The president wouldn't rule out the possibility of a recession during a recent interview.

Mass selloffs have continued to impact the stock market amid worries about the direction the U.S. economy is heading towards.

The Trump administration has some important decisions if it plans to jeopardize its long-time trading relationships to hopefully address a historic U.S. trade deficit.