Alcohol has moved centre-stage over the last 48 hours or so as the tension between the US and the EU over tariffs intensified.
President Trump stunned the industry yesterday (13 March) with his latest upper-case-heavy salvo on Truth Social, threatening a 200% tariff on alcohol products from the EU.
Trump’s warning followed the EU’s announcement of plans to hit US products with its own tariffs, a move sparked by Washington’s decision to tax steel and aluminium shipments globally.
Brussels’ tariffs, due to be introduced next month, cover a range of products but, in his post, Trump (who usually describes tariffs as “beautiful”) highlighted the EU’s “nasty” levy on US whiskey.
EU wine-industry body CEEV warns a 200% tariff would “effectively shut down the US market” for the bloc’s wines. SpiritsEurope, an association representing distillers in the EU, says it is “deeply alarmed” by Trump’s latest statement and has implored Washington and Brussels to stop using the sector as “a bargaining chip in conflicts that have nothing to do with us”.
Trump claimed a 200% tariff would be “great for the Wine and Champagne [sic] businesses in the US” but, if the US President believes his strong-arm policy on trade would be wholeheartedly welcomed at home, he’s mistaken. US spirits trade body DISCUS has repeated its call for “toasts not tariffs” and is urging both sides to sit down and strike a “zero-for-zero” deal.
Tony Parise, an SVP at US wine importer The Sorting Table, argues the 200% levy would “pose an existential threat to restaurants, retailers, bars, importers, and even domestic wineries that depend on a healthy distribution system” in the US.
“For every $1.00 in damage these tariffs inflict on the EU, they cause $4.52 in losses to American businesses. The fallout will be massive,” Parise posted on LinkedIn yesterday.
A principal aim of those keen to wield tariffs is to bolster domestic manufacturing. Trump may think slapping a hefty levy on EU alcohol imports will boost US producers – and some may agree with him – but, ultimately, there are no real winners.
“Nobody wins in a tariff war. It’s been proven time and time again,” Vincent Hanna, the CEO and co-founder of Bourbon business Brother’s Bond told Just Drinks deputy editor Fiona Holland in a wide-ranging interview this week.
The industry has been busy lobbying the Trump administration to consider the impact on the sector of the President’s moves (and plans) on tariffs.
Earlier this week, major US food and beverage manufacturers asked the Trump administration for “targeted” tariff exemptions on imported ingredients.
In a letter to the White House, US trade body Consumer Brands Association requested the “targeted and carefully calibrated removal” of a selection of ingredients and inputs from US tariff measures.
Diageo, meanwhile, has asked the US government to consider changes to rules of origin requirements as an alternative to imposing tariffs.
The Bulleit Bourbon maker, which has warned US levies on Canada and Mexico could hit profits, said changes to the rules could support President Trump’s trade aims without resorting to tariffs.
For now, a cloud of uncertainty hangs over all business, including the drinks industry. There’s no escaping the fact Washington’s to-ing and fro-ing on tariffs. combined with Trump’s threats on social media, are making it very hard for drinks businesses to make important strategic and commercial decisions.
April Fool’s Day looks to be an important date in the diary. The EU plans to introduce its tariffs in two steps, starting on 1 April and then have them fully in place from 13 April.
There could, of course, be time for negotiations that may see these planned measures dialled down, put on hold, or called off.
An official at The European Commission told Just Drinks today there is a call planned this afternoon between US Commerce Secretary Howard Lutnick, the country’s Trade Representative Jamieson Greer and Maroš Šefčovič, the EU’s Commissioner for Trade and Economic Security.
Here’s hoping common sense prevails.
