France Declares ‘Wine War’ on U.S. with €5 Billion Export Blitz Amid Tariff Standoff

9 May, France

France has launched a €5 billion export support plan in response to escalating U.S. tariffs on European wines.

France has established a €5 billion ($5.6 billion) emergency aid scheme in support of its wine and spirits exports to the United States to alleviate the effects of increasing U.S. tariffs on European alcohol. This is part of a wider response from the European Union to defend its industries against U.S. trade actions.

The European Commission authorized the French aid package, which is set to begin on May 8 and run until July 8, 2025. The scheme provides short-term guarantees to French exporters, so they can expeditiously ship to the U.S. before even larger new tariffs might apply. The U.S. remains France’s largest market for wine and spirits, with 2024 exports above 5% higher, reaching €3.8 billion.

Starting this week, the U.S. has begun imposing a 20% tariff on European wines as a partial response to President Donald Trump’s who suggested even steeper tariffs of 200% on European wines and spirits. This is also a reaction to the EU’s proposed 50% tax on American whiskey, as part of a series of tariff disputes.

The European Union released a list of U.S. products totaling approximately €95 billion ($107 billion) that could receive retaliatory tariffs. This includes €1.3 billion in U.S. wine, beer, and spirits. The EU’s executive has also announced it has initiated to began of legal proceedings at the World Trade Organization against the U.S., for alleged violations of WTO rules.

The growing tensions in global trade have significant ramifications for European producers, especially in the U.S. luxury industry. For French winemakers, the tensions are especially frightening, recalling the massive costs incurred after they lost all its sales in the U.S. when tariffs were imposed (25% tariffs) in 2019, which lost them 40% of its sales in the U.S. costing the sector €500 million.

Not only is the U.S. the top export market for its wines and spirits in the world, but French wine it’s still the top country for wine exported (€3.8 billion worth of wines and spirits every year).

In the U.S., the tariffs are expected to force huge price increases on European wines, with price increases possibly tripling the price of a bottle of wine for consumers. Due to this and the uncertainties surrounding the tensions, it does not take much for American consumers and retailers to start stockpiling European wine.

Wine.com and Zachys retailers have seen a flurry of activity in consumer purchases, particularly on high-end European wines.

The U.S. wine industry is preparing for hit. The National Association of Wine Retailers, believes that the total loss of revenue to wine retailers from USTR’s proposed 100% tariffs on wine will total roughly $10.6 billion.

A number of members expect to have to lay off as much as 25% of their employees due to drops in sales revenue, with thousands of employees losing their jobs.

Luxury French retailers are also under pressure. LVMH stock, the parent company of Louis Vuitton and Moët & Chandon, fell roughly 2%. Christian Dior and Kering, both also owners of Gucci and Balenciaga, faced similar losses. Hermès, which is famous for its Birkin and Kelly handbags, fell 2.6%. The loss in stock prices combined removed about $9 billion from the value of these four companies.

The situation remains in flux, where both parties expressed their intent to negotiate but will continue to prepare for a longer-term trade dispute. The European Commission suspended all tariffs for 90 days to allow for a resolution and also opened a public consultation window until June 10.

If the parties do not reach an agreement, there is a stated commitment by the EU to move ahead with implementing stimulatory retaliatory measures.

While the dispute remains unresolved, the future is still uncertain for the wine and spirits industry globally, where there may be legacy impacts on the market structure, consumer behavior, and international trade relations.

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