President Trump pushed ahead in his rapidly escalating trade war Thursday as he threatened to impose a 200% tariff on wine and spirits from the European Union if the EU enacts a 50% import tax on U.S. whiskey, as planned.
The EU announced its tariff plan in response to Trump’s imposition of a 25% tax on steel and aluminum imports from Europe and all other trading partners earlier this week. The whiskey tariff is scheduled to take effect on April 1, a day before Trump plans to impose a new set of reciprocal tariffs on trading partners around the world.
Writing on his social media platform Thursday, Trump demanded that the EU tariff on whiskey be eliminated — or else. “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 E.U. REPRESENTED COUNTRIES,” he wrote. “This will be great for the Wine and Champagne businesses in the U.S.”
Whatever effect the tariff may have on the U.S. wine and liquor industry, a French businessman said it would be devastating in his country. “A 200 percent tax on European wines and spirits would mean an immediate halt to all shipments to the United States,” said Gabriel Picard, chairman of the Federation of Wine and Spirits Exporters, per The New York Times. “That’s almost 4 billion euros wiped off the French trade balance, for zero gain.”
European Commission President Ursula von der Leyen said that trade officials from the EU and U.S. would discuss the matter Friday, in the hope that the new tariffs can be avoided. “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 emphasize that we are open for negotiations.”
Stocks tumble again: The S&P 500 dropped into correction territory Thursday, falling 1.39% on the day to 5,521. The index is now down 10.1% from its record close on February 19. The Dow Jones Industrial Average was down, as well, falling 537 points, or 1.30%.
Asked about the latest market decline Thursday, Trump said he plans to stay the course and again described the trade deficit as a kind of theft that he intends to eliminate. “I’m not going to bend at all,” Trump said. “We’ve been ripped off for years, and we’re not going to be ripped off anymore.”
Some investors fear there could be more turbulence ahead. Alpine Macro, a research firm in Montreal that focuses on global trends, said in a research note Thursday quoted by CNBC that the “moment of maximum tariff-related pain likely remains ahead, potentially peaking April-July, given credible threats of more 25% sectoral tariffs (autos, pharmaceuticals, semiconductors, etc.), reciprocal tariffs on key trading partners, higher tariffs targeting China and the E.U., and additional non-border-related tariffs on Canada and Mexico.” The analysts warned that markets have not yet fully accounted for these possible negative shocks, suggesting that stock prices could continue to fall.