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President Donald Trump has warned that the U.S. may impose a 200% tariff on wine, champagne, and other alcoholic drinks from the European Union. This follows the EU’s decision to place a 50% tariff on American bourbon whiskey. The tension between the U.S. and EU over trade continues to grow.

U.S. Retaliates Over EU’s Bourbon Tariff

On Thursday, President Donald Trump took to Truth Social to voice his anger over the EU’s planned tariff increase on U.S. bourbon whiskey. The 50% tariff will take effect on April 1. This decision by the EU is part of a broader €26 billion ($28 billion) response to U.S. tariffs on European steel and aluminum.

Trump warned that if the EU did not remove the tariff, the U.S. would impose a 200% tariff on all wine, champagne, and alcoholic products from France and other EU countries. He also said the move would benefit American businesses by boosting U.S. wine and champagne sales.

The U.S. has long produced domestic versions of European products like champagne, parmesan, and gorgonzola. A 200% tariff would likely hurt European exports and lead to more tension between Washington and Brussels.

EU Rejects Trump’s Threats

European leaders quickly responded to Trump’s threat. French Foreign Trade Minister Laurent Saint-Martin dismissed the idea of backing down. He said, “We will not give in to threats.” He accused Trump of purposely stoking a trade war. Saint-Martin added that France was prepared to retaliate against the U.S.

The French wine industry is worried about the impact of a 200% tariff. Jean-Marie Fabre, a winemaker from Fitou, noted that French wine production already faces many challenges. He pointed out that the industry is still recovering from the COVID-19 pandemic, inflation, and climate problems. “We’ve already endured many crises,” Fabre said. “This trade war only adds more uncertainty.”

Financial Markets React to Growing Tensions

The escalating trade war had an immediate effect on financial markets. European stock prices fell. France’s CAC 40 index dropped 0.3%, while Germany’s DAX dropped 0.6%. Shares in major European beverage companies also saw losses. Pernod Ricard fell nearly 4%, Rémy Cointreau dropped 3.5%, and LVMH, which owns Moët & Chandon, lost 1.4%.

U.S. markets also reacted. The S&P 500 dropped by 0.7% when the market opened. This follows a trend of market fluctuations due to Trump’s trade war. However, Treasury Secretary Scott Bessent downplayed the market’s reaction. He said, “A little market fluctuation over a few weeks doesn’t worry us.”

Trade War Between U.S. and EU

This trade war is not new. President Trump has often accused the European Union of unfair trade practices. He has said that the EU was “formed for the sole purpose of taking advantage of the United States.” On Thursday, he called the EU one of the “most abusive and hostile taxing and tariffing authorities in the world.”

In response, European Commission President Ursula von der Leyen defended the trade relationship between the U.S. and the EU. She said that U.S.-EU trade has brought prosperity and jobs on both sides of the Atlantic. She added that the trade ties have helped millions of people in both the U.S. and Europe.

What’s Next for U.S.-EU Relations?

The trade dispute between the U.S. and EU is far from over. Both sides are bracing for more tariffs and economic strain. The future of the relationship depends on whether the two sides can find a way to resolve their differences.

The wine industry and financial markets are worried about the long-term effects of this conflict. The 200% tariff could hurt both European producers and American businesses. It could also cause even more tension between the U.S. and EU.

As the dispute continues, many are wondering if diplomacy will help avoid more economic damage. Will the U.S. and EU be able to reach an agreement, or will the trade war continue to escalate? Only time will tell.

In the coming weeks, businesses and governments will continue to navigate this complex situation. The outcome of this trade dispute could have far-reaching consequences for both sides.