Key Points
- US President Donald Trump has threatened a 200 per cent tariff on European alcohol imports.
- EU plans counter-tariffs on US whiskey, with bourbon facing a 50 per cent duty hike.
- Businesses warn of economic risks, urging leaders to halt the escalating trade war.
United States President Donald Trump has threatened to impose a 200 per cent tariff on wine, cognac and other alcohol imports from Europe, opening a new front and raised recession fears.
Stocks fell following the news, as investors worried around the world's largest consumer market.
"The Entire World is RIPPING US OFF!!!" Trump wrote on his Truth Social platform.
Trump's threat came in response to a European Union (EU) plan to impose tariffs on American whisky and other products next month — which itself is a response to Trump's 25 per cent tariffs on steel and aluminium imports that took effect on Wednesday.
The European Commission had no immediate comment on Trump's post.
Canada, a neighbour and close ally that is the US' biggest aluminium provider, has also announced countermeasures of its own to Trump's metals tariffs.
Alcohol is emerging as a key point of tension in the trade war Trump has initiated since returning to the White House in January.
Some Canadian retailers have pulled American bourbon from their shelves as relations between the two countries have frayed and Trump has threatened to annex that country.
Many of the EU's proposed countermeasures, worth €26 billion ($45 billion) in all, would apply to products that have little more than symbolic value, such as dental floss and bathrobes.
But the proposed 50 per cent duty on US bourbon would be a significant hit for the industry, which has witnessed exports grow steadily since the US lifted tariffs Trump imposed during his first 2017-2021 term in office.
Trump said his proposed 200 per cent tax on European alcohol would benefit domestic producers, and shares of US drink manufacturers rose on the news.
Nevertheless, industry officials on both sides of the Atlantic urged their leaders to de-escalate.
Trump's barrage of threats has spooked investors, businesses and consumers. Producers of jets, coffee, clothing, autos and packaged foods are among the many businesses scrambling to assess their operations as his actions threaten international supply chains.
Some economists say the uncertainty threatens the health of the US economy and raises the risk of recession.
A Reuters/Ipsos poll released on Wednesday found 70 per cent of Americans expect Trump's tariffs to lead to higher prices.
Trump says tariffs are a crucial tool to revitalise US manufacturing industries that have withered due to decades of globalisation, and he has stacked his administration with officials who line up with those views.
