In the latest twist to the increasingly tense global trade skirmish, U.S. President Donald Trump has issued a stern warning, advocating for a potential 200% tariff hike on European alcohol such as wine and cognac. This threat marks a significant escalation, inciting concern across financial markets and exacerbating fears of a looming recession.
The impact on the spirits sector was immediate, with stock prices for European liquor producers suffering notable declines. Notable declines were seen in Pernod Ricard, which fell by 3%, Remy Cointreau by 3.4%, Davide Campari at 2.8%, and Diageo, which faced a modest decline of 0.3%.
Trump’s countermeasure targets European imports and directly responds to the European Union’s recent enactment of a 50% tax on American whiskey. This decision comes as retaliation against Trump’s imposition of a 25% tariff on steel and aluminum imports into the United States.
In a fiery discourse, Trump criticized the EU, lambasting its whiskey tariffs as ‘nasty’ and berating the bloc as ‘hostile and abusive’ towards the United States. He called for the EU to immediately revoke what he perceives as unfair trade practices, highlighting Europe’s unfavorable trade stance against America.
The announcement sent jitters through stock markets, causing a downturn in major indices. The S&P 500, for instance, slid more than 10% from its previous peak, entering correction territory. This backdrop has left investors wary of a tightening trade ecosystem encircling the colossal U.S. consumer market.
France remains a significant exporter of wine to the U.S., with over $4.89 billion worth shipped annually, positioning America as its most lucrative overseas market. The EU’s retaliatory tariffs are slated to take effect on April 1, as Europe, alongside trade ally Canada, voices resistance to what both consider unjustified American trade measures by introducing reciprocal duties on a variety of U.S.-produced goods.
