Business reporters, BBC News
Getty ImagesUS President Donald Trump has threatened a 200% tariff on any alcohol coming to the US from the EU in the latest twist in an escalating trade war.
Trump made the threat in response to the EU’s plans for a 50% levy on US-produced whiskey as part of its retaliation for US tariffs on all steel and aluminium imports.
He called for the immediate removal of the EU’s tariff on US whiskey, calling the bloc “nasty”, “hostile and abusive”, and “formed for the sole purpose of taking advantage of the United States”.
A European Commission spokesperson said that “calls are being prepared” between between the US and the EU to discuss the situation.
It confirmed that its trade commissioner, Maroš Šefčovič, had “reached out to his American counterparts” after Trump threatened retaliation against EU tariffs on Wednesday.
Writing on Truth Social, Trump said the tariff – a new border tax on alcohol imports from the EU – would be “great for the Wine and Champagne businesses in the US”.
The latest threat marks a continued escalation of a trade war which has rattled financial markets amid concerns over the impact on the economies and consumers in many countries around the world, including the US.
Earlier this month, he put 25% taxes on goods from Mexico and Canada, some of which he later suspended, and raised levies on Chinese imports into the US to at least 20%.
His action on steel and aluminium came into effect on Wednesday, imposing a blanket duty of 25% on imports and ending exemptions that the US had previously granted for shipments, including from the EU and Canada.
Trump has also threatened further tariffs, promising to unveil country-specific “reciprocal” tariffs next month, while floating new taxes on a range of more specific items, including copper, lumber and cars.
Leaders in Canada and Europe – which are among America’s biggest trade partners – have called the new taxes unjustified. They struck back with their own tariffs on a range of US products after the metals tariffs.
Trump had warned on Wednesday that he intended to respond, posting his plans on social media early on Thursday.
“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 EU represented countries,” he said.
Shares in the US were lower on Thursday, with the Dow and S&P 500 both down about 1% in mid-day trading.
Europe exports more than €4.5bn ($4.89bn; £3.78bn) worth of wine each year to the US, which is its largest export market, according to the Comité Européen des Entreprises Vins, which represents the European wine industry.
Ignacio Sánchez Recarte, secretary-general of the group, said if Trump carried through on his threats, it would destroy the market, costing thousands of jobs.
“There is no alternative to sell all this wine,” he said, pleading with the two sides to “keep wine out of this fight”.
In interviews with US business media on Thursday, White House officials blamed the EU for the escalation of the dispute.
“Why are Europeans picking on Kentucky bourbon or Harley-Davidson motorcycles? It’s disrespectful,” Commerce Secretary Howard Lutnick told Bloomberg Television, describing the back-and-forth as “off the topic”.
“He wants these countries to respect him. And all this showed you is that Europe and Canada do not respect Donald Trump and do not respect America’s ability to build its steel and aluminium industry, which is vital for national security ,” he said.
Treasury Secretary Scott Bessent warned that a trade war was likely to inflict more economic pain on the EU than on the US, dismissing concerns that the clash will spiral.
“One or two items, with one trading bloc – I’m not sure why that’s a big deal for the markets,” he said.
In an interview with the BBC’s HardTalk, European central bank president Christine Lagarde, said that the EU had “no choice” but to retaliate, noting “all parties want respect”.
“At the moment, everybody is positioning,” she said. “What I suspect is that…until there is implementation, parties are going to sit down and negotiate. That is what usually happens in trade matters.”
If the conflict were to develop into a “real trade war”, “everybody will suffer”, she warned.
The clash over alcohol is a reprise of a battle that played out during Trump’s first term, when he first hit aluminium and steel with tariffs.
The EU retaliated with tariffs of its own, including a 25% tax on American whiskey.
In the aftermath, whiskey sales to the EU dropped 20%, falling from roughly $552m in 2018 to $440m in 2021, according to the Distilled Spirits Council of the US.
The two sides ultimately reached a deal and the tariffs were lifted, after a deal that exempted a certain amount of European metals from the duties.
But Trump ended that carve-out on Wednesday and has indicated little appetite for deal-making this time, at least when it comes to steel and aluminium.
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