US President Donald Trump reignited tensions in trade with the European Union after he threatened to impose tariffs of 200% on wine, champagne, and other alcohol products imported from France or the EU.
This move is a retaliation for the decision of the EU to place a tariff of 50% on American Whiskey, which further strained relations between these two economic titans.
European alcohol stocks tumble
After Trump’s statement, the shares of major European producers of alcohol saw a steep decline.
Pernod Ricard and Remy Cointreau of France, as well as Italian drink group Davide Campari, all saw their shares fall by more than 4 percent.
Also, the luxury conglomerate LVMH which is home to renowned brands like Moet & Chandon, Hennessy and Moet & Chandon, saw its share price drop by over 0.8%.
The British drink giant Diageo (owner of Johnnie Walker, Guinness and other brands) experienced a modest drop of only 0.12%.
Market reaction is a reflection of growing concern over the financial impact on European alcohol exports. This is particularly true in the segment for premium wines and spirits, which heavily relies on the American market.
The EU has retaliated against whiskey tariffs
Trump’s threat to raise tariffs is a response to the EU’s decision recently to impose a tariff of 50% on US whiskey as part of its retaliation to American tariffs against steel and aluminium.
Two phases will be used to implement the EU’s new measures. The first phase targets iconic American products such as Kentucky Bourbon and Harley-Davidson Motorcycles.
The second wave of shipments, which is expected to arrive in mid-April and will be primarily agricultural products, industrial goods, and other items from Republican key districts.
Trump labelled the EU in a post on social media as being “hostile” and “abusive”, and warned the EU that it would be slapped with hefty tariffs of 200% if they did not remove their whiskey tariffs.
Trump posted on Twitter on Thursday that if the tariff was not lifted immediately, “the US would soon place a tariff of 200 percent on all Champagnes and wines coming from France, as well as other EU-represented countries.”
Trade disputes: A History
It isn’t the first time that the US-EU Trade War has caught the Alcohol Industry in its crossfire.
The US introduced tariffs against European spirits during Trump’s first tenure, which resulted in a substantial drop of American whiskey exported to the EU.
Exports dropped by 20 percent over the next three years, according to the Distilled Spirits Council of the United States.
There is little hope of a quick resolution despite the lobbying efforts made by executives in industry to oppose the recent round of tariffs.
Ulrich Adam of spiritsEurope described Trump’s threats as “a shocker” and demanded that alcoholic beverages be excluded from trade disputes unrelated to alcohol.
The impact on European Alcohol Market
US market is critical for European wine and spirit.
The US exported American whiskey to Europe for $699 millions in 2024.
The Champagne industry in France, and specifically, is heavily dependent on US exports, as 16% of total exports are sent to American shores.
Concerns about financial impacts on European producers as well as the possibility of prolonged instabilities in transatlantic trade relationships have been raised by the tariff threat.
The industry is concerned that Trump may now follow through on his previous threats to impose tariffs on Champagne.
As new developments unfold, this post Pernod, Remy and other alcohol stock fall after Trump threatens a 200% tariff against European spirits could be updated.
This site is for entertainment only. Click here to read more
