U.S. President Donald Trump is turning to a favourite target — European producers of alcoholic drinks — in the latest escalation of a global trade war.
Shares of Pernod Ricard SA, Remy Cointreau SA and LVMH, the maker of Dom Perignon Champagne and Hennessy Cognac, fell Thursday after Trump threatened to impose a 200% tariff on European wine and other alcoholic drinks.
Trump threatened to apply the tariffs in a social media post after the EU said it would impose duties on $28 billion of U.S. goods, including American whiskey, beginning next month. The new levy would apply to all wine, Champagne and other alcohol from the EU, he said.
Pernod fell as much as 3.8% on Thursday in Paris. It’s down by more than a third over the past 12 months. Remy, which has lost about half of its value over that period, was down as much as 4.5%.
Trump had already targeted European wine and spirits during his first term in office, imposing a 25% tariff on a range of drinks and food products.
Separately, French Cognac producers are caught up in a trade dispute between the European Union and China. After the EU’s decision to move forward with duties on Chinese-made electric vehicles, Beijing responded by targeting EU brandy, including French Cognac. That followed an investigation into allegations that producers were dumping the spirit in the Chinese market.
Since then, French shipments to China have tumbled, and producers such as Pernod have lowered their financial guidance.
A trade group, spiritsEurope, had already signaled concern about escalating trade wars after the European Union announced tariffs on US whiskey and other alcoholic drinks, urging the EU to keep spirits out of unrelated disputes.
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Sabah Meddings, Bloomberg News
--With assistance from Kit Rees.
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