The cellars of the Taittinger Champagne house in Reims, France. President Donald Trump has threatened to place a 200 percent tariff on all wine and spirits coming from the European Union. (Francois Nascimbeni/AFP/Getty Images)
The United States and Europe have threatened to make beer, wine and spirits a front in their bruising trade war, designed to create disruption not just for your ordinary tippler, but also for a sector already struggling with crazy weather, a grape glut and changing tastes.
At stake is more than soaring prices at the bistro or the drink aisle at the markets. To producers and consumers alike, these goods are markers of national and regional identity — which could make a coming fight much more emotional.
Which is an aim of trade wars — to inflict pain to get a better deal.
President Donald Trump earlier this month threatened to slap a 200 percent tariff on all wine and spirits coming from the European Union, after the Europeans announced a planned 50 percent tariff on American whiskey, which was reaction to Trump’s 25 percent tariff on European aluminum and steel.
At the news of the U.S. alcohol tariffs, jaws dropped on the continent, with some leaders predicting disaster and others scrambling to protect their own production. Farmers represent only a small percentage of the populations in Europe and America — but they have outsize political clout.
Trump says high tariffs on European wines will help American vintners. But U.S. winemakers are wary, and the U.S. distributors who run global supply chains even more so. The sky-high high tariffs have not even gone into effect yet, but Tuscan wine is already idling at Italian ports and Irish whiskey orders have been canceled.
“This will be great for the Wine and Champagne businesses in the U.S.,” Trump wrote on Truth Social. Forget that only the Champagne region of France produces Champagne — the rest is “sparkling wine.”
The U.S. Wine Trade Alliance, representing 4,000 small American importers and distributors, issued an all-caps warning to “HALT ALL SHIPMENTS OF WINE, SPIRITS, & BEER FROM THE EU.”
“The current risk of tariffs is too high,” said its president, Ben Aneff. A section on the Alliance’s website is dedicated to “Tariff Updates.”
Wresting over trade is normal. Countries enact tariffs to protect or bolster domestic production. Demanding taxes and levies on alcohol dates to antiquity, a tool deployed by the Romans.
But many in the international spirits industry assume a coming war will be costly for everyone and ruinous for some. Economists worry about inflation and recessionary pressures.
And in the latest round of trade hostilities, Trump has surprised the Europeans with the steep cost of the proposed levies. “This time the U.S. is more hardcore,” said Tobias Gehrke, a senior policy fellow at the European Council on Foreign Relations.
Gehrke said that Brussels is anxiously awaiting to see Trump’s list of tariffs, scheduled to be released Wednesday. Does the president want to better the U.S. trade position — in a transactional way? “Or are they out to hurt Europe because they don’t like Europe?” Gehrke asked.
Levies on aluminum and steel can have outsize impacts on manufacturing economies. But they can feel abstract to many consumers. Most of us don’t go to the hardware store to buy a steel beam. But it might feel personal when governments hit a favorite beer brand.
These likely targets — Italian chianti, Spanish Cava or a Kentucky sour mash — don’t just roll off an assembly line someplace, but come from a particular region deeply invested in the products.
Some European and American landscapes look the way they look because they make wine, whether it is the Loire or Napa Valley, both tourist destinations.
One of the main points of targeted tariffs is to apply pressure — politically.
Which is why in the last tariff spat in 2018, the European Union targeted Harley-Davidson motorcycles because they are made in Wisconsin, home of former House speaker Paul D. Ryan. And also why the E.U. went after bourbon made in Kentucky, home of Sen. Mitch McConnell, former majority leader.
Motorcycles, jeans and whiskey are still on the European hit list, set to be announced in mid-April.
Leaders of France, Italy and Ireland have publicly criticized going after American whiskey, out of fear that Trump would escalate and target European spirits.
American tariffs on alcohol from the European Union have the “potential to be devastating,” the Irish Whiskey Association warned. (The Irish will have a bigger headache if Trump targets pharmaceuticals exported from Ireland.)
Fearful of a tariff war, Italian wine and spirits exporters to the United States are already slowing shipments, according to the trade group Federvini.
“Our members have received requests from importers to suspend shipments, as no one wants to risk bottles being hit by tariffs once they arrive in the U.S.,” Micaela Pallini, the president of Federvini, told Reuters.
“After an initial front-loading phase, in which companies tried to anticipate shipments, the market is now at a standstill: importers fear they will find themselves with unsellable stock at uncompetitive prices,” she said.
Italian Prime Minister Giorgia Meloni warned that a tit-for-tat trade war with the United States was a bad idea.
“It is not wise to fall into the temptation of reprisals that become a vicious circle in which everyone loses,” Meloni told the Italian parliament earlier this month. “We must continue to work concretely and pragmatically to find possible common ground and avoid a trade war that would benefit neither the U.S. nor Europe.”
The United States doesn’t export that much whiskey to Europe. But Europe ships a lot of wine to America. About 20 percent of European wine exports went to the United States last year — about $14 billion in sales.
Andre Sapir, an economist and fellow at Bruegel, a European think tank, agreed that wine and spirits might not be the bloc’s biggest export. European companies ship way more steel, machinery, automobiles, pharmaceuticals, plastics.
But booze is emotive. The way the trade war game is played, Sapir said, is that a country wants to hurt its opponent more than it hurts itself (and its consumers) with retaliatory action.
“We’ll know much more next week,” he said.