US President Donald Trump has threatened to impose a massive tariff on European alcohol in response to the European Union’s retaliation against his steel and aluminum tariffs.
In the latest escalation of global trade tensions, Trump said his administration would impose a 200% tariff on alcoholic beverages from the EU unless it rescinds the 50% tariff the European government imposed Wednesday on US spirits.
The U.S. tariff comes after the European Union moved to reinstate an import tax on American whiskey.
On Tuesday, the European Commission, the executive body of the EU, announced it was retaliating against U.S. tariffs on steel and aluminum by lifting the suspension on previous levies on U.S. goods, including whiskey, and imposing new ones. Those changes will take effect in April.
“The European Union must act to protect consumers and business. The countermeasures we take today are strong but proportionate,” Ursula von der Leyen, president of the European Commission, said Tuesday.
Commerce Secretary Howard Lutnick said Thursday on Bloomberg Television that Trump was “totally annoyed” by the EU’s actions, leading to the latest threat.
The U.S. still plans to announce an additional round of so-called reciprocal tariffs in April. European countries are expected to be impacted by those measures as well.
“Their tariffs are way up here, and our tariffs are down here. How about: Relax. Let us balance it,” Lutnick said Thursday about the EU.
The news Thursday appeared to put pressure on European liquor stocks, which had already been struggling recently.
Paris-traded shares of LVMH Moet Hennessy Louis Vuitton, the largest luxury brand company in the world and headed by billionaire Bernard Arnault, the richest man in Europe, fell for a ninth day Thursday and have dropped 14% since the end of February. Remy Cointreau eased for a third day, bringing its loss to almost 11% in that stretch. Pernod Ricard also weakened for a third day, and is down more than 6% since Monday’s close.
The trade war appears to have also taken a bite out of U.S. alcohol stocks. Shares of Jack Daniels parent Brown Forman are down more than 7% this week.
