President Donald Trump on Thursday threatened to impose a 200% tariff on alcohol from the European Union in response to the region’s 50% retaliation on US whiskey, further escalating tensions between the two long-time trading partners.
Trump also sharpened his rhetoric towards the EU. For decades, this has been one of the closest allies in the United States.
“The European Union, one of the world’s most hostile and abusive tax and customs authorities founded for the sole purpose of using the United States, has just made 50% tariffs on whiskey awkward,” writes Trump of the True Society. “If this tariff is not removed immediately, the US will soon place a 200% tariff on all wines, champagne and alcoholic products representing France and the other EU. This is perfect for the US wine and champagne business.”
A spokesperson for the European Commission said the region’s trade minister had already contacted US counterparts and “a phone call has been prepared.”
Late Thursday morning, Trump posted: “There is no free trade in the United States. We have ‘silly trade’. The whole world is tearing us apart!!!”
The US is the world’s largest import market for both wine and champagne, with the former having annual sales of $4.9 billion and the latter having over $1.7 billion. Meanwhile, exports of US-made wines rank fifth in all countries with around $1 billion, while exports of champagne and sparkling wines are only $67 million, and 12th in the world.
The impact of Tattart tariffs could be heavier on US consumers who rely on importing goods than manufacturers.
Trump exerted tariff threats on his stubborn US partners, making it a central practice in his early second administration. The latest volley shows that despite protests from economists and business groups over the impact of such policies, he has no plans to stop him from doing so. Trump’s biggest tariff regime — targeting all steel and aluminum imports into the United States — came into effect Wednesday. In response, the EU and Canada announced they would impose retaliatory obligations on US products.
The president has repeatedly suggested that the US’s massive trade deficit and the rest of the world are signs of weakness. Trump acknowledged that his tariff strategy could lead to a period of “transition” in the US economy.
On Thursday morning, Commerce Secretary Howard Lutnick added additional context to the EU, which specifically targets Trump’s latest barbs and state products with strong Trump support.
“The president was totally bothered by the fact that Europeans did this, so you’ll hear a response from someone who cares emotionally about America,” he said on Bloomberg television. “He cares about America and wants to look after Americans. And why do Europeans choose the Harley Davidson motorcycle, the secretary of Kentucky Bourbon? That’s rude.”
Ratnic added that Trump was considering “balancing” trade ties with the EU.
“We are your biggest, most important trading partner. Let’s treat us with respect and balance it a little,” he said.
So far, the market response to Trump’s approach has been widely negative. Major stock indexes have now erased post-election profits as investors rebel against the prospects of higher costs. On Thursday, stock futures fell quickly in response to Trump’s latest announcement, but the losses were somewhat infringing after a favorable inflation report.
Most scholars say that the ability of US consumers and businesses to import goods cheaply as well will primarily lead to higher standard of living and more efficient production for businesses.
Jean-Nicholas Fievet contributed.
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