Trump Threatens EU with 200% Tariffs on Alcohol

President Donald Trump has threatened to impose a 200% tariff on alcoholic beverages imported from European countries.

This move comes in response to the EU's planned 50% tariff on American whiskey, set to take effect on April 1, 2025.

Trump issued his warning via a social media post, stating that if the EU does not immediately remove its whiskey tariff, the US will retaliate with steep tariffs on wines, champagnes, and other alcoholic products from France and other EU nations.

The EU's decision to reimpose tariffs on US whiskey is part of a broader response to ongoing US tariffs on steel and aluminum imports. The European Commission has pledged to target US goods worth approximately €26 billion unless negotiations can resolve the trade dispute.

Trump's threat is seen as a significant escalation, potentially impacting a wide range of EU exports to the US. The former president concluded his post by suggesting that such tariffs would benefit US wine and champagne businesses.

Financial markets reacted swiftly to Trump's announcement, with EU stock markets experiencing declines across the board. Drinks manufacturers were particularly affected, with Pernod Ricard on the Paris CAC index falling more than 3.5% immediately after the news broke.

The FTSE 100 also entered negative territory, although Diageo, which owns brands like Guinness, saw only a minor decline of 0.1%. While the UK has not been directly threatened with tariffs beyond existing steel and aluminum duties, many British companies could be impacted by an expanding EU-US trade conflict.

The trade dispute has significant implications for both sides. EU nations export alcoholic drinks worth over $11 billion annually to the US, with wine accounting for half of that sum. Before Trump's threat, countries like Spain, France, and Italy had urged the EU not to target wine and spirits in its response to the metals tariffs.

The Irish Whiskey Association expressed concern about the growing protectionism, stating that "there is no winner in a trade war" and that tariffs could be devastating for Irish whiskey producers, impacting jobs and investments.

As tensions continue to rise, there remains a possibility for last-minute negotiations to avert further escalation.

However, if the current trajectory holds, both the US and EU could face significant economic impacts from these tariffs. The situation highlights the ongoing challenges in global trade relations and the potential for sudden shifts in policy to affect markets and industries worldwide.