The US-EU trade dispute has intensified, with US President Donald Trump threatening to impose a 200% tariff on European wine, cognac, and other alcohol imports.
This move comes in response to the European Union’s (EU) plan to raise tariffs on American whiskey and other products next month—a retaliatory measure against the US 25% tariffs on steel and aluminium that took effect on Wednesday.
Markets reacted swiftly to the escalating tensions, with the S&P 500 closing over 10% below its record high, confirming a correction in the benchmark US index. Investors fear that Trump’s move signals broader trade restrictions that could hurt global markets and further strain economic ties.
Meanwhile, Canada, a key US ally and top supplier of aluminium, has also announced countermeasures and has taken the dispute to the World Trade Organization (WTO).
Alcohol at the centre of US-EU tariff dispute
The latest round of trade tensions highlights how alcohol imports have become a key battleground in the economic standoff.
The EU’s planned tariffs on American whiskey were in direct response to Trump’s recent metals tariffs, and now the White House is pushing back with a 200% tax on European alcohol imports.
The decision is expected to impact major European exporters, particularly France, Spain, and Italy, which dominate the US market for fine wines and spirits.
The European Commission has yet to issue a formal response to Trump’s latest tariff threat, but Brussels is likely to push back with further countermeasures, escalating tensions even further.
Meanwhile, some Canadian retailers have started removing American bourbon from their shelves, reflecting growing discontent over Trump’s “America First” trade policy.
US-Canada trade talks stall over metal tariffs
Canada, which supplies the largest share of aluminium to the US, has also entered the dispute, launching a formal complaint with the WTO over Trump’s 25% tariffs on steel and aluminium.
Canadian officials, including Finance Minister Dominic LeBlanc and Ontario Premier Doug Ford, met with US Commerce Secretary Howard Lutnick to discuss potential resolutions, but talks failed to produce a breakthrough.
Trump has remained firm on his protectionist stance, reiterating during an Oval Office meeting with NATO Secretary-General Mark Rutte that reciprocal tariffs would be imposed on all US trading partners starting April 2.
He defended the measures as necessary to protect American businesses, stating,
We’ve been ripped off for years, and we’re not going to be ripped off.
Financial markets react as global trade tensions rise
The ongoing trade war has raised concerns about broader economic consequences, particularly for industries reliant on transatlantic commerce.
The S&P 500 closed in correction territory, reflecting market anxiety over new trade restrictions.
Analysts warn that if the US-EU dispute escalates further, it could disrupt global supply chains and slow economic growth.
As of now, European alcohol exporters face uncertainty over whether the 200% tariff will be enforced, while American whiskey producers remain vulnerable to retaliatory EU tariffs.
With negotiations showing little progress and additional trade penalties looming, businesses across both continents are bracing for further economic fallout.
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