Trump threatens 200% tariff on alcohol from EU

US President Donald Trump has threatened a 200% tariff on any alcohol coming to the US from the European Union (EU) in the latest twist in an escalating trade war.

The threat is a response to the EU’s plans for a 50% levy on imports of US-produced whiskey as part of its retaliation to Trump’s tariffs on all steel and aluminium imports to the US.

The US president 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’s latest threat of retaliation.

Trump said the EU’s tariff on US-produced whiskey was “not removed immediately”, he would “shortly place a 200% Tariff on all wines, champagnes & alcoholic products coming out of France and other EU represented countries”.

The president, on Truth Social, added that a US alcohol tariff – which would be a new border tax on alcohol imports from the EU – would be “great for the Wine and Champagne businesses in the US”.

The latest move 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.

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”.

Earlier this month, Trump 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.

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 an agreement that exempted a certain amount of European metals from the duties.

But Trump has indicated little appetite for deal-making this time round, at least when it comes to steel and aluminium.

The inclusion of wine and whiskey is symbolic – there are few consumer goods more iconic than French Bordeaux or Tennessee whiskey. From a value standpoint, drinks trade is worth less than some of the other items facing tariffs.

However, Mary Taylor, a US-based importer of European wines, said the latest threat posed a more existential risk to her business, which imports about two million bottles a year, that would ripple out to restaurants, bars and distributors.

Ms Taylor weathered the 25% tariff Trump put on EU bottles during his first term by expanding her distribution in Europe, but said “200% is a whole different ball game”.

She is currently waiting for an order of 16 containers, the cost of which could triple if Trump follows through on his threat.

“It just looks like a big, giant threat to our livelihoods.”

In interviews with US business media on Thursday, White House officials blamed the EU for escalating 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”.

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 could spiral.

“One or two items, with one trading bloc – I’m not sure why that’s a big deal for the markets,” he said.

Shares in the US were lower on Thursday, with the Dow Jones and S&P 500 stock markets both down about 1%. London’s FTSE 100 was flat, while Germany’s Dax dropped about 0.5% and in Paris, the Cac 40 closed 0.64% lower.

In an interview with the BBC’s HardTalk, European central bank president Christine Lagarde, said that the EU had “no choice” but to retaliate.

If the conflict were to develop into a “real trade war”, “everybody will suffer”, she warned.

“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.”

So far, Trump has shown little tolerance for retaliation from countries over the tariffs he has introduced.

Earlier this week, he blasted Canada with the threat of a 50% tariff on its steel and aluminium after the Canadian province of Ontario responded to new tariffs with a surcharge on electricity exports to the US.

He rescinded that threat after Ontario agreed to suspend the charges.

Former Trump adviser Stephen Moore, now an economist with the Heritage Foundation, said he thought the EU would have to make a concession to defuse the situation, noting that Trump had consistently voiced concerns about rules on agricultural products.

“Absolutely this is going to end up with a deal,” he said. “It’s only a question if it ends up in a deal in a day, a week, a month or six months, but there will eventually be a negotiated settlement.”

The full HARDtalk will be available from 14 March on the BBC News Channel, iPlayer, the World Service and as a podcast.