① US President Trump threatened to impose a 200% retaliatory tariff on EU wines, champagnes, and other products in response to the EU's tariffs on American whiskey; ② Trump's tariff actions have triggered market uncertainty, with the S&P 500 Index dropping nearly 10% from its peak in February.
US President Trump's latest threat to impose a 200% retaliatory tariff on wines, champagnes, and other alcoholic beverages from the EU is the latest sign of escalating trade tensions between the USA and the EU.
On Thursday morning local time, Trump stated on Social Media that if the EU does not lift its tariffs on American whiskey, he will push forward with the aforementioned import tariff measures. The EU's measures were in retaliation for the USA's steel and aluminum tariff measures that took effect on Wednesday.
“If this tariff on whiskey is not lifted immediately, the USA will soon impose a 200% tariff on all wines, champagnes, and alcoholic products from France and other EU member states, which will be great news for the USA's wine and champagne industry.”
As a result of this news, the stock prices of European alcoholic beverage producers have all fallen. LVMH, which owns wine and spirit businesses, dropped by 2.2%, while spirit producer Pernod Ricard fell by 3.6% and Rémy Cointreau by 4.5%.
In response to the USA's tariffs on steel and aluminum, the EU announced a day earlier that it plans to impose a 50% tariff on imported American whiskey, motorcycles, and personal watercraft starting April 1, which will hit some of the USA's most famous products, including Kentucky bourbon and Harley-Davidson motorcycles. The EU stated that other products facing new or increased import tariffs in early April include cranberries, umbrellas, tablecloths, and handkerchiefs.
The second round of tariffs by the EU will take effect in mid-April. The initial list of products includes a variety of items from American chewing gum to poultry, beef, white chocolate, Soybean, carpets, and watermelons. The EU stated that consultations will be held with member states and stakeholders before finalizing this list. The EU's tariffs will also target United States Steel and Aluminum products.
It is understood that some EU tariffs will have the greatest impact on states that voted for the Republican Party in the last US presidential election, with the tariffs on American beef being one example.
The tariffs imposed by the EU on whiskey will mainly impact Kentucky and Tennessee, the two largest whiskey-exporting states in the USA to the EU, while the tariffs on American motorcycles will affect Harley-Davidson, which has factories in Wisconsin.
A series of recent actions by Trump are further igniting the trade war, forcing countries to take retaliatory measures. He has also promised to impose separate tariffs on industries such as Autos, Lumber, Semiconductors, Pharmaceuticals, and Copper.
Overall, Trump is implementing his comprehensive tariff agenda in a piecemeal manner, filled with uncertainties, including delays and reversals. On Tuesday, Trump threatened to impose a 50% tariff on Canadian Steel and Aluminum products. However, he retracted this threat a few hours later after Ontario suspended the additional charges on Electrical Utilities exports.
Using tariffs as leverage in trade and geopolitical disputes is putting pressure on the market. The S&P 500 Index has fallen nearly 10% from its peak in February, raising concerns about an economic recession. On Wednesday, the US stock market rebounded after experiencing weeks of turbulence and declines.
During his first term, Trump often cited the rising stock market as evidence of the success of his policies. However, his recent reaction to the stock market decline seemed understated, claiming that this week's sell-off is a Buy opportunity and a necessary step to reshape US Industry and supply chains.
Editor/lambor