Trump Threatens Massive Tariff on European Wine Sparking Trade War Escalation

President Donald Trump has reignited trade tensions between the United States and the European Union by threatening a substantial 200 per cent tariff on wine, champagne, and other alcohol products imported from the EU. The move is a response to the bloc’s planned 50 per cent surcharge on US whiskey exports, which is set to take effect on 1 April in retaliation for American tariffs on steel and aluminium.

Posting on his Truth Social platform, Trump described the EU’s actions as “nasty” and warned that if the proposed levies are not retracted “immediately,” his administration would proceed with its own aggressive tariff plan. Trump claimed such measures would boost domestic wine and champagne businesses, including his own son Eric Trump’s Virginia-based Trump Winery, which operates a 1300-acre estate producing wines such as the high-end “Presidential Reserve Inaugural Edition.”

The European Commission expressed strong disapproval, calling for an end to the tit-for-tat measures that could escalate into a trade war. Spirits Europe, a leading industry body, described itself as “deeply alarmed” and urged both sides to reach a resolution that avoids using the alcohol sector as a bargaining tool in unrelated disputes. A representative stated, “This cycle of retaliation must stop immediately to prevent further harm to businesses and consumers on both sides of the Atlantic.”

The results of previous tariffs imposed during Trump’s first term highlight the potential economic damage. Between 2018 and 2021, a 25 per cent EU tariff on American whiskey led to a 20 per cent drop in US exports, valued at $552 million before falling to $440 million. Although exports recovered by 60 per cent when tariffs were removed under the Biden administration, renewed restrictions could once again place the sector under significant strain.

Major European alcohol manufacturers such as Rémy Cointreau, Pernod Ricard, and Campari Group could face devastating financial consequences if the tariffs come to fruition. Analysts estimate that Rémy Cointreau, which relies heavily on the US market, could see profits wiped out entirely, representing a 134 per cent earnings decline. Campari and Pernod Ricard would also face substantial profit losses of 68 per cent and 41 per cent, respectively.

Although US producers like Brown-Forman, the owner of Jack Daniel’s, and Constellation Brands could benefit from increased domestic market share if European imports become prohibitively expensive, the overall economic impact of such measures remains negative. The American Distilled Spirits Council has issued a direct appeal to Trump for a zero-tariff agreement, stating that it would protect both jobs and industries. The council’s president, Chris Swonger, remarked, “We want toasts, not tariffs.”

Stock markets have also begun to reflect concerns over the escalating trade dispute. Shares in major European alcohol producers, including LVMH, Rémy Cointreau, and Campari Group, have declined since Trump issued his threats. The broader American S&P 500 index fell into correction territory amidst the heightened tension, with investor sentiment dampened by continuing uncertainty. Economic analysts warn that pursuing protectionist policies could have far-reaching impacts on global trade relationships.

Despite Trump’s historical pattern of making abrupt trade policy threats, it remains unclear whether he will follow through on his tariff ultimatum. In past cases, he has reversed or softened positions following diplomatic discussions. Nonetheless, EU officials and industry stakeholders are bracing for potential fallout if cooler heads fail to prevail in the coming weeks.