In a significant move that could reshape transatlantic trade, U.S. President Donald Trump has reaffirmed his stance on imposing 25% tariffs on products made in the European Union, particularly targeting automobiles but potentially affecting a wide array of goods, including agribusiness.
During the first cabinet meeting of his second term, Trump reinforced the campaign rhetoric that the EU has taken unfair advantage of the U.S. in trade relations, a claim that has sparked immediate reactions from European officials.
The EU’s Response and Strategic Shift
European Commission Vice President Stéphane Séjourné swiftly responded, stating that "Europe will react immediately and firmly." He also announced plans to strengthen economic partnerships with India, a move aimed at diversifying trade dependencies and counterbalancing the potential impact of U.S. tariffs. The EU sees such tariffs as unjustified obstacles to fair trade, warning that they could disrupt the balance of a trade relationship worth 1.5 trillion euros annually and constituting 30% of global trade in goods and services.
The uncertainty surrounding these tariffs is particularly concerning for the Italian wine sector, which exports approximately 2 billion euros to the U.S.—about a quarter of its total exports. More broadly, the Italian agribusiness sector sends 7.8 billion euros worth of goods to the U.S. annually, making it the top non-EU market for Italian food and beverages. If the tariffs come into effect, they could severely impact these industries at a time when wine consumption in the U.S. is already experiencing a decline, despite projections of rising imports for Italian wines in 2024.
During Trump's first presidency, a similar tariff imposition was justified by a trade dispute involving Airbus and Boeing. At that time, Italian wine was spared, while French producers bore the brunt of the duties. However, with the new round of tariffs, there is no clear indication that any EU country will receive preferential treatment, suggesting that Italian wine could be at serious risk this time around.
Economic Projections and Industry Warnings
Trade organizations have been cautious in their public statements, but there is growing concern within the wine and agribusiness sectors. Coldiretti, Italy’s largest agricultural organization, has estimated that a 25% tariff on Italian agri-food exports to the U.S. could cost American consumers up to 2 billion euros, leading to significant declines in sales. According to Coldiretti’s analysis of previous tariff impacts, duties imposed on Italian agrifood products during Trump’s first term resulted in:
- A 15% drop in fruit exports
- A 28% decrease in meat and processed fish exports
- A 19% decline in cheese and jam exports
- A 20% reduction in liquor sales
Even though Italian wine was initially unaffected in the last tariff round, it still experienced a 6% decrease in U.S. exports.
Possible European Retaliation
Should Trump’s tariffs materialize, the EU may retaliate as it did during his first term, when it imposed additional 25% duties on iconic American agrifood products such as ketchup, cheddar cheese, peanuts, cotton, salmon, and various liquors. Such countermeasures could escalate into a broader trade conflict, which would be detrimental to both economies.
Unione Italiana Vini (UIV), led by Lamberto Frescobaldi, has estimated that a tariff of 20% on still wines and 10% on sparkling wines could result in a revenue loss of approximately 330 million euros for Italian wine exports. This projection is based on the French experience from 2020 to 2021, when a 25% tariff led to a 24% decline in sales volumes.
With the U.S. as the world’s largest wine market and European wines making up over 30% of its imports, new tariffs could have severe consequences for producers across the EU. France, which already endured a tariff-induced downturn between 2019 and 2021, is particularly vulnerable to another round of restrictions. Industry experts, such as Mirella Menglide of Ice New York, note that there has been no significant rush among importers to stockpile Italian wine ahead of potential duties, reflecting uncertainty over the final decision.
Final Thoughts
While no tariffs have been officially implemented yet, the risk has become significantly more concrete. The global wine industry is already grappling with economic pressures, declining consumption, and shifting trade policies. The imposition of tariffs on EU products, particularly wine, could deepen the market’s challenges and force producers to navigate an increasingly volatile transatlantic trade environment. As the situation unfolds, industry stakeholders, policymakers, and businesses will need to adopt a cautious but proactive approach to safeguard their interests.
Source: WineNews