Is Trump going to kill off Champagne?

Well, it looks like it’s going to be war between the European Union and the US. A trade war that is, before you start digging a shelter in the backyard. In response to proposed EU 50 percent tariffs on American whiskey, President Trump wrote on Truth Social, his own social media platform:

The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky. If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the U.S.

His response has sent the drinks world reeling.

The EU tariffs were a response to Trump putting up tariffs on aluminum and steel imports from Europe. James Simpson, managing director of Pol Roger was exasperated: “We do not understand how we have been dragged into a trade war over aluminum and steel.” We’ve been here before, of course. Last time Trump was in the White House, he put tariffs on various things including 10 percent on selected European wines and spirits (but not Champagne for some reason). These tariffs were suspended by Biden. Now they’re back and things might get ugly.

If the 200 percent tariffs go ahead, European wines and spirits at all levels could disappear from American shelves, bars and restaurants. A $20 wine will soon cost you nearly $60 in the US, while a $100 wine will cost about $300. Who is going to pay that? It could push importers like Kermit Lynch — which has built a reputation bringing the best of France and Italy to America — out of business.

It’s hard to overstate how damaging a prolonged trade war would be for Europe’s drink producers. America is the number one export market for Cognac, Champagne, Bordeaux, Burgundy and Italian greats like Barolo, Brunello and Chianti. Last year 29 percent of the European Union’s wine went to the US, an amount worth €4.9 billion.

Bordeaux expert Jane Anson told me: “If the European market is hit with 200 percent tariffs, the US as primary market for Bordeaux and other fine wines would be taken off the table, and prices will inevitably be impacted.”

Bordeaux and Champagne especially have had a difficult time of it recently with declining sales globally. Both produce a vast amount of wine, and the prices of even the best wines in Bordeaux have stagnated in recent years. Pol Roger’s James Simpson says, “the people who are worried are the Bordelais, they’re sitting on shedloads of wine which they were hoping to sell to Americans.”

Meanwhile China has slapped a 35 percent tariff on Cognac and isn’t buying Bordeaux like it used to, and Europe itself is heading for recession. If the tariffs go ahead there’s likely to be genuine hardship across the wine growing regions of Europe. But James Simpson was putting a brave face on things: “We can all be agile and flog to someone else. The Champenois attention needs to come back to the UK, we still get through 20 to 22 million bottles a year.” He thinks the period of pain will only last until the next US election in 2028. The only upside of the disappearance of the US market is that it could mean cheaper wine for European and British customers.

California too could benefit from a trade war considering the size of its wine industry. It doesn’t export much — except to Canada, though not so much these days as the Canadians have put a 25 percent tariff on some US goods in retaliation for… well… it’s hard to keep up. Meanwhile there’s an unofficial boycott of American wines and spirits, with some Canadian liquor boards refusing to stock any American products.

Other potential winners would be Argentina, New Zealand and Australia. And if Americans are looking for a replacement for real French champagne, they could look to England. Domaine Evremond, Taittinger’s Kent outpost, is just about to release its first sparkling wine in April. Could this be the Brexit dividend we hear so much about? Mark Driver from Rathfinny, one of England’s largest producers, thinks not: “The truth is that most Americans don’t even know that we make sparkling wine in England, let alone that most of it is better than Champagne.”

At the moment, however, there’s no need to start panic buying Lafite if you’re in America. Jane Anson says, “right now the big operators have good stocks in the States, so it would not have immediate impact.” According to James Simpson all the Champagne houses “shipped huge quantities in January” in case something like this happened.

Both thought the tariffs were unlikely to happen. Anson says: “The likelihood is that this is step one in a negotiating process.” We saw how Trump used the threat of tariffs against Colombia back in January to get his way. Adrian Bridge, CEO of Taylor’s Port, unflappable as ever, says: “the stock in the system may well outlast the time span of the tariff threats which seem to be threats with an even shorter life span than a lettuce.” There’s some sangfroid for you.