Trump calls EU 'hostile' and 'abusive' in latest trade war escalation over alcohol tariffs
President Donald Trump threatened to impose a 200% tariff on European alcohol if the European Union does not abandon its planned tax on American whiskey — his latest retaliatory action escalating trade war tensions between the U.S. and countries around the world.
The EU's planned tax on American whiskey is part of its own retaliation strategy following Trump's 25% import tariffs on steel and aluminum that went into effect Wednesday. The European Commission responded Wednesday, calling Trump's tariffs "unjustified" and said it would impose counter tariffs on $28 billion worth of U.S. exports to Europe next month.
The commission said, however, it remains open to negotiations and would work with the Trump administration to find a solution.
Trump replied Thursday in a Truth Social post criticizing the commission's announcement.
"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 wrote.
He threatened to impose the 200% tariff on all European wines, champagnes, and alcohol coming into the U.S. from Europe if the EU's tariff on American whiskey is not removed immediately.
"This will be great for the Wine and Champaign businesses in the U.S.," Trump continued.
The EU is made up of 27 countries. If a deal is not made, the commission said the EU's retaliatory tariffs will go into into effect by April 13. In addition to alcohol, they will likely raise prices of exports to the U.S. including steel, aluminum, textiles, home appliances, plastics, and food.
Ursula von der Leyen, president of the European Commission, said in a statement Tuesday the commission deeply regrets Trump's original decision to impose 25% tariffs, but that the EU would act in a way that is "strong but proportionate."
"Tariffs are taxes. They are bad for business, and even worse for consumers. These tariffs are disrupting supply chains," she said in the statement. "They bring uncertainty for the economy. Jobs are at stake. Prices will go up. In Europe and in the United States."
Ben Stender, who owns a wine importing and distribution company that works with producers in France, Italy, and Spain said a 200% tariff on alcohol from the EU would be "untenable" for his business and many like it across the U.S.
Stender's company has shipments of wine currently making the roughly two-week trip from the coast of western Europe to the U.S. Before it can be transported to his company's warehouse, he will need to pay for it, including whatever the tariff amount is at its time of arrival. His company ordered those shipments before Trump threatened the tariff on European alcohol and did not plan to pay a 200% tax on them.
"Speaking in realistic terms, if he slapped those tariffs on even next week, I'd be totally screwed," Stender said.
European alcohol typically needs to go through an importer, distributor, and retailor before an American consumer can purchase it. That means there are three points at which the price of wine is usually marked up before Americans can pick it out on grocery store shelves or from a restaurant menu.
And because those mark ups are usually based on a percentage, not a fixed dollar amount, it's likely Americans could see an even more than 200% mark up on their favorite alcohol brands if the tariff takes effect. Another possibility, Stender added, is that large alcohol brands could mark up their domestically-made products in an attempt to make up for their losses on their imported alcohol.
Stender warns that a tariff-induced price hike would hurt the alcohol industry more for instance than the home appliances industry would be harmed by a price bump on refrigerators due to increased levies on steel and aluminum.
"If your refrigerator breaks, you're buying a new refrigerator," Stender said. "If your wine is 200% more in cost, people are going to think twice."
Trump's tit-for-tat economic strategy has investors nervous and Americans wondering if it will lead the nation into its next recession. The stock market continues to tumble as the president threatens more tariffs on U.S. trading partners.
Contributing: Reuters reporters Doina Chiacu, Phil Blenkinsop, Louise Heavens, Bernadette Baum and Mark Porter.
Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_