EU retaliates strongly, Mr. Trump 'gets angry', opens new tariff front to fight with allies

“If this tariff is not removed immediately, the United States will soon impose a 200% tariff on all wines, champagnes and other alcoholic products originating from France, as well as from other countries represented by the EU,” the White House threatened.

EU retaliates strongly, Mr. Trump is 'hot-faced', the tariff war between allies is heating up. (Source: tovima.com)

President Donald Trump has threatened to impose a 200% tariff on all alcoholic products originating from the European Union (EU), including French wine and champagne, as he takes the transatlantic trade war to a new level.

This is seen as a blunt response to the EU's 50% retaliatory tariffs on US whisky and other products, escalating tensions between the two close allies and long-time trading partners.

It also opened a new front in a global trade war that has roiled financial markets and raised recession fears.

New front in the global trade war

"The EU, one of the most hostile and abusive taxing and tariffing bodies in the world , created for the sole purpose of taking advantage of the United States, just imposed a 50% tariff on whiskey," Trump criticized on his Truth Social platform on the morning of March 12.

“This will be very good for the wine and champagne businesses in the US.”

France, in particular, has benefited from exporting fortified wines to the US, an industry that suffered huge sales losses during Mr Trump’s first term as he ramped up tariffs.

The White House boss is also using tariffs to impose better trading terms for American companies or to protect them from what he sees as unfair global competition.

The EU, a political and economic bloc of 27 member states, tightly controls access to its internal market, much to the frustration of President Trump, who has long wanted more American products to enter Europe.

The US imposed tariffs of up to 25% on EU steel and aluminium earlier this week, as scheduled, with more tariffs to follow on April 2 as part of the Trump administration’s “campaign” of “reciprocity” in global markets.

The EU then retaliated by imposing tariffs on $28 billion worth of US goods, which are scheduled to take effect on April 1. The new EU tariffs will target a wide range of US exports, including steel, aluminum, textiles, household goods, and agricultural products—including poultry, beef, seafood, nuts, sugar, and vegetables.

"Jobs are at risk. Prices will rise. In Europe and in the United States," European Commission President Ursula von der Leyen said of the tariffs that the two allies, the US and the EU, have just officially announced to impose on each other's goods.

"Tariffs are taxes. They are bad for businesses and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty to the economy," von der Leyen said of the consequences of the tariffs.

Speaking shortly after the White House boss's post on Truth Social , US Commerce Secretary Howard Lutnick said on Bloomberg TV that the US President was responding "with strength and power" to retaliation from trading partners like the EU.

Mr. Lutnick said of Washington's arguments that the US will "teach the rest...to respect" when it comes to trade, because when you can easily see international products like cars in the US, but you can't see any American cars elsewhere in the world because of the reason - unfair terms of trade.

The US is not worried, what about the EU?

Alcohol is becoming a major point of tension in the ongoing trade war between the two longtime allies.

Meanwhile, the French Wine Producers Association said that French champagne exports fell by nearly 10% last year as economic and political instability affected consumer demand for sparkling wine in key markets such as France and the United States.

In July 2024, producers called for a cut in this year's grape harvest after sales fell more than 15% in the first half of 2024. The Champagne Committee (Comite Champagne) said that full-year exports fell 9.2% compared to 2023 to 271.4 million bottles.

“Champagne is really a barometer of the consumer’s state of mind,” said Maxime Toubart, president of the Syndicat General des Vignerons and co-chair of the Champagne Commission. “This is not the time to celebrate, because inflation, conflicts around the world, economic uncertainty and political tensions are all around the corner…”, he said.

Sales in the French market reached only 118.2 million bottles, down 7.2% compared to 2023 - the Association said this was due to the economic and political "darkness" that is covering this country.

Meanwhile, difficulties remain, President Emmanuel Macron, despite having to appoint his fourth Prime Minister within a year, his administration is still considered "weak" and still faces a difficult "battle" to pass the 2025 budget - which led to the overthrow of the previous government.

President Trump has made the threat of tariffs on U.S. partners a core practice early in his second administration. The latest round of attacks suggests he has no plans to stop, despite some economists and business groups voicing concerns about the consequences.

The US president has repeatedly suggested that America’s large trade deficit with the rest of the world is a sign of weakness. He has acknowledged that his tariff strategy could lead to a “transitional” period for the US economy – signs of which have been weak in recent weeks – but which will eventually strengthen.

Treasury Secretary Scott Bessent said he was not concerned about the volatility on Wall Street because the Trump administration was focused on a long-term economic transformation. He warned that the EU would lose more in a trade war because it is more dependent on exports to the United States.

“I would advise EU leaders that they are on the losing side of this debate economically,” Bessent told CNBC .

US Commerce Secretary Lutnick added that Mr Trump was looking to “balance” trade relations with the EU. “We are your largest and most important trading partner. Treat us with respect and give us some balance,” he said.

A 200% tariff would be a “disaster,” said Ernst Büscher, a spokesman for the German Wine Institute, noting that the US is the most important export market for German winemakers, accounting for about a sixth of exports.

“When a 25% tariff was imposed on German wine during the first Trump administration, importers and winemakers shared the cost to protect consumers from price increases—but that would not be possible with a 200% tariff,” Ernst Büscher added.

Meanwhile, French Trade Minister Laurent Saint-Martin appeared tough as the US-EU trade war showed signs of escalating.

"France is determined to stand together with the European Commission and our partners" to fight back. We will not bow to threats and are always ready to defend our industries, Laurent Saint-Martin insisted.

The EU has not yet responded immediately to President Trump’s latest move. But it may not be as simple as attacking and retaliating with tariffs, as the US is one of the “important trading partners”, the world’s largest importer of wine and champagne, and also Europe’s largest.

Observers are concerned that in this relationship, tariffs are a useful lever for President Trump in trade negotiations with the EU.

Source: https://baoquocte.vn/eu-manh-tay-tra-dua-ong-trump-nong-mat-mo-mat-tran-thue-quan-moi-quyet-dau-voi-cac-dong-minh-307516.html