Hardening his stance, US President Donald Trump vowed to impose a 200 percent tariff on champagne and other alcoholic products from the European Union. According to an ABC report, Trump’s threat would escalate trade tensions amid ongoing disputes between Washington and Brussels.
Amid an escalating trade war, Trump’s threat came a day after the European Union announced plans to impose tariffs on USD 28 billion worth of US goods, including a 50 percent tariff on whiskey. The EU’s move was a response to previous US duties on steel and aluminum imports, which have been a point of contention in transatlantic trade relations.
Trump urged the EU to withdraw its tariff on whiskey, stating that if it remained in place, the US would “shortly place” retaliatory tariffs on alcohol products from the bloc. He also took aim at the EU’s broader trade policies, describing the organisation as “one of the most hostile and abusive taxing and tariffing authorities in the World.”
European Commission President Ursula von der Leyen, in a statement the day prior, defended the EU’s decision, asserting that the bloc “must act to protect consumers and business.” The planned tariffs on US goods reflect the EU’s strategy to counterbalance the economic impact of American trade measures, reported ABC News.
The latest exchange of tariff threats had an immediate effect on financial markets. Stock futures dropped early Thursday, reversing gains from the previous day in the S&P 500 and Nasdaq. Dow Jones Industrial Average futures also showed signs of further decline, extending losses from Wednesday’s trading session.
The standoff between the US and EU is part of a broader trade conflict that has seen retaliatory measures from other major economies. Canada previously responded to US steel and aluminium tariffs by imposing its own levies on USD 20.7 billion worth of American goods.
Meanwhile, the Trump administration recently doubled tariffs on Chinese imports to 20 per cent, prompting China to impose retaliatory duties on US agricultural exports, further escalating tensions between the world’s two largest economies, ABC News reported.
The ongoing trade disputes have fuelled concerns of a potential economic downturn. Last week, Goldman Sachs raised its projected probability of a recession from 15 per cent to 20 per cent, while Moody’s Analytics adjusted its estimate to 35 per cent, citing the mounting risks from global trade uncertainty.
