Even Trump’s friends are in firing line as president targets French champagne

Washington: Donald Trump has threatened to impose a 200 per cent tariff on European wine, champagne and spirits if the European Union goes forward with a planned tariff on American whiskey, in a move that could hurt even those close to the US president.

The European import tax, which was unveiled in response to steel and aluminium tariffs by the United States administration, is expected to go into effect on April 1, just ahead of separate reciprocal tariffs that Trump plans to place on the EU.

Donald Trump has set his sights on European wine and spirits.Credit: Bloomberg

But Trump, in a morning social media post, vowed a new escalation in his trade war if the EU proceeds with the planned 50 per cent tax on American whiskey.

“If this Tariff is not removed immediately, the US will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER EU REPRESENTED COUNTRIES,” Trump wrote. “This will be great for the Wine and Champagne businesses in the US.”

The threat suggests that even companies that have publicly stood by Trump could be collateral damage in his intensifying trade war.

They include French luxury goods brand LVMH, whose chief executive, Bernard Arnault, is France’s richest man and attended Trump’s inauguration in January.

The two men have known each other since the French entrepreneur came to New York in the early 1980s seeking to start a real estate business, an endeavour that wasn’t successful.

But Arnault’s company now owns wine and spirits brands, including Moët & Chandon, Krug, Veuve Clicquot and Hennessy, all of which could be subject to Trump’s retaliatory tariffs.

The Italy-based Campari Group could also be hurt by the tariffs, even though the White House praised it on Tuesday for possibly opening a US factory.

Trump has defined his opening weeks in the White House with near-daily drama regarding tariffs, saying that taxing imports might cause some economic pain but would eventually lead to more domestic manufacturing and greater respect for America. The S&P 500 stock index fell roughly 1.5 per cent in Thursday afternoon trading, while European alcohol stocks also tumbled.

Donald Trump and daughter Ivanka with Bernard Arnault (centre) at a Louis Vuitton workshop in Texas in 2019.Credit: AP

But the latest threat raises questions about whether the wider business community would be willing to openly challenge Trump’s trade wars, which have hurt the sharemarket and scared consumers who worry about inflation worsening.

Gabriel Picard, who heads the French Federation of Exporters of Wines and Spirits, said 200 per cent tariffs would be “a hammer blow” for the sector. He said the US market was worth €4 billion ($6.9 billion) annually for French exporters of wines and spirits.

“Not a single bottle will continue to be expedited if 200 per cent tariffs are applied to our products. All exports to the United States will come to a total, total, halt,” Picard said. “With 200 per cent duties, there is no more market.”

European Commission President Ursula von der Leyen said the EU trade commissioner would speak with his US counterpart on the phone on Friday.

A vineyard below the Ville-Dommange commune in the Montagne de Reims region of France.Credit: The New York Times

“We don’t like tariffs because we think tariffs are taxes, and they are bad for business, and they are bad for consumers,” she said. “We have always said at the same time that we will defend our interests. We’ve said it, and we’ve shown it, but at the same time, I also want to emphasise that we are open for negotiations.”

It’s unclear how the import taxes would be absorbed among vintners, distillers, brewers, distributors, retailers and consumers.

Because of Trump’s threat, a previously non-tariffed $US15 ($24) bottle of Italian prosecco could possibly increase in price to $US45. Similarly, the cost of a €30 bottle of bourbon in Paris could increase to €45.

Many of the EU’s retaliatory tariffs announced on Thursday, worth €26 billion, target products of largely symbolic value, such as dental floss and bathrobes, but the proposed 50 per cent duty on American bourbon would be a significant hit to an industry that has seen exports grow steadily since the Biden administration lifted tariffs Trump imposed during his first term in office.

Workers load barrels of bourbon on to a truck at The Jim Beam Distillery in Kentucky in 2020.Credit: Getty Images

The EU accounted for roughly 40 per cent of all US spirits exports in 2023, according to the Distilled Spirits Council of the United States, a trade group. Likewise, the US buys 31 per cent of all European wine and spirits exports, according to Eurostat.

New York bottle shop owner Holly Seidewand said before Trump threatened tariffs on European alcohol, the spirits industry was already reeling from lay-off announcements in the Kentucky Bourbon sector and tariffs planned by the EU on American spirits.

“This ongoing tariff war doesn’t just harm importers – it weakens domestic brands, disrupts distributors and squeezes retailers who rely on global selections,” she said. “In the end, consumers will bear the brunt of it all.”

As of now, Europe seems unwilling to back down.

“Trump is escalating the trade war he has chosen,” French Delegate Minister for Foreign Trade Laurent Saint-Martin said on X. “France, together with the European Commission and our partners, is determined to fight back. We will not give in to threats and will always protect our industries.”

Trump feels aggrieved by the EU, complaining to reporters on Friday (AEDT) about the lack of US car sales there as well as lawsuits and fines filed against Google and Facebook parent Meta.

“They are suing all of these companies, and they’re taking billions of dollars out of American companies,” Trump said. “And I guess they’re using it to run Europe or something.”

Trump, in announcing the new steel and aluminium tariffs on Wednesday, which also hit Australia, openly challenged US allies and vowed to take back wealth he claims is “stolen” by other countries.

US whiskey makers have encouraged Trump to broker a deal, however, pointing out that an open market would create American jobs and increase manufacturing and exports.

Trump’s separate 25 per cent tariffs on Canada and Mexico could also put 31,000 jobs at risk in the hospitality sector.

AP, Reuters, Bloomberg

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