13 March 2025
If you are covering the news that Donald Trump is threatening to put a 200% tariff on alcohol from EU countries, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Donald Trump’s threat to slap 200% tariffs on European alcohol is clearly a negative for both consumers and the industry. Provenance matters when selling premium spirits and wine – cognac has to be from Cognac, champagne from Champagne etc. As a result, it is not a category that the Trump administration will encourage onshoring with.
“That said, what this could do is result in some substitution from consumers to American sparkling wine and domestic spirits. This in turn would result in increased sales for some American businesses and Trump could still declare victory in one way or another.
“So far Scotch Whisky has not yet been included in the threat. During Trump’s first presidency the industry faced 25% tariffs, and this hit the sector hard. It will be desperate not to see a repeat of this. For now, the UK government is taking an understandable but unprincipled decision to stay as far away from US/EU trade disputes as possible in the hope British businesses are left untouched, or at worst face lower tariffs being implemented.
“Where these tariffs end is anyone’s guess. If the EU were trying to play hardball or get his attention to the retaliation, then they have succeeded. The EU appeared to be adopting a strategy closer to that of Canada rather than Mexico, and as such the trade war has potential to escalate further. With Trump everything is a negotiation, and this is likely just the opening salvos of the trade war.
“For companies it is now abundantly clear that the present US administration doesn’t believe in the benefits of free trade and is putting a huge amount of effort into boosting US business. What was economic orthodoxy has few public proponents right now and as such further tariffs will be expected.”
