President Donald Trump warned on Thursday that he may impose a 200% tariff on alcohol from the European Union after the region placed a 50% tariff on U.S. whiskey. The dispute is making tensions rise between two longtime trade partners.
Trump took to Truth Social to criticize the European Union, which has been one of America’s closest allies for many years.
“The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky,” Trump said. “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. This will be great for the Wine and Champagne businesses in the U.S.”
The European Commission responded, saying that its trade minister had already reached out to U.S. officials, and that they are preparing to have further discussions.
Later, Trump posted again: “The U.S. doesn’t have Free Trade. We have ‘Stupid Trade.’ The Entire World is RIPPING US OFF!!!”
The U.S. is the world’s largest importer of both wine and champagne, with wine bringing in $4.9 billion annually and champagne adding another $1.7 billion. However, the U.S. exports far less, ranking fifth in wine exports at around $1 billion, and just 12th in champagne exports, which total $67 million.
The ongoing back-and-forth tariffs could hurt U.S. consumers more than U.S. manufacturers, as they rely on imports of these goods.
The Distilled Spirits Council of the United States, which represents alcohol makers, urged President Trump to work out an agreement with the EU. They pointed out that neither side has had tariffs on liquor for decades.
“We urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs, which will create U.S. jobs and increase manufacturing and exports for the American hospitality sector. We want toasts not tariffs,” said Chris Swonger, President and CEO of the Distilled Spirits Council.
Trump has made using tariff threats against traditional U.S. allies a common part of his approach during his second term. This new threat shows he plans to continue, despite criticism from economists and business groups about the negative impact of such policies. On Wednesday, Trump’s steel and aluminum tariffs went into effect, prompting the EU and Canada to impose their own tariffs on U.S. goods.
Trump has argued that the U.S.’s large trade deficit with the world is a sign of weakness. While he acknowledges that tariffs could lead to economic “transition” for the U.S., he believes the country will be stronger in the long run.
On Thursday morning, Commerce Secretary Howard Lutnick explained that Trump was angry over the EU’s move, especially because they targeted products like Kentucky bourbon and Harley-Davidson motorcycles.
“The President was totally annoyed that the Europeans did this, and so you’re going to hear back from someone who emotionally cares about America,” Lutnick said on Bloomberg Television. “He cares about America, and he wants to take care of Americans. And why are Europeans picking on Kentucky bourbon, Harley-Davidson motorcycles? It’s disrespectful.”
Lutnick also emphasized that Trump is looking to “balance” trade relations with the EU.
“We are your largest, most important trading partner. Treat us with respect, and let’s get a little balance,” he said.
Despite Trump’s position, market reactions have been mostly negative. Stock prices have fallen in response to fears of higher costs, and major stock indexes have erased gains made after the presidential election.
