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French finance minister Eric Lombard called U.S. President Donald Trump's trade war "stupid" after he threatened 200 percent tariffs on alcohol imports from the European Union. Lombard said the Europeans would have to respond in kind.
"It's a stupid war, but if we want to be able to negotiate, we have to put ourselves on equal terms, so we're also going to raise tariffs," Lombard said on Telematin Friday morning.
Why it Matters
The U.S. is one of the largest importers of European wine and spirits, so the relationship is useful leverage for Trump in trade negotiations.
France, in particular, benefits from strong wine exports to the U.S. Its industry took a big knock in sales during Trump's first term when he imposed tariffs.
Trump is using tariffs to force better trading terms for American companies or to protect them from what he sees as unfair global competition.
Markets are spooked by the trade war and fear it will trigger a recession. Stocks have shed so much value on the S&P 500 index in recent weeks that it has entered "correction" territory.
What to Know
The emerging trade war is escalating by the week.
On Thursday, Trump accused the EU of having "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."
He was responding to the EU's newly announced tariffs on $28 billion of American imports: steel, aluminum, textiles, home appliances and agricultural products—including poultry, beef, seafood, nuts, sugar and vegetables.
Trump cited a 50 percent tariff on American whiskey in particular, and said the U.S. would "shortly" place a 200 percent tariff on all alcoholic products coming out of the EU, including wines and champagne—a levy that would hit French exporters hard.
The EU was retaliating against Trump's 25 percent tariff on its steel and aluminum that came in this week.
What People Are Saying
U.S. Commerce Secretary Howard Lutnick called the European response to Trump's metals tariffs "disrespectful" and that he was "totally annoyed."
"The president has made it crystal clear that he finds this tit-for-tat really abusive and aggravating," Lutnick told Bloomberg TV on Thursday.
"His objective is steel and aluminum tariffs. Let him build his steel and aluminum business in America because that's important."
Lutnick added: "He cares about America and he wants to take care of Americans. Why are Europeans picking on Kentucky bourbon or Harley Davidson motorcycles? It's disrespectful."
Gabriel Picard, president of the French Federation of Exporters of Wines and Spirits, said 200 percent tariffs would be "a hammer blow" for France's alcohol export industry, impacting hundreds of thousands of people.
"Not a single bottle will continue to be expedited if 200 percent tariffs are applied to our products. All exports to the United States will come to a total, total, halt," Picard told The Associated Press.
European Commission President Ursula von der Leyen said on Tuesday: "Jobs are at stake. Prices will go up. In Europe and in the United States. Tariffs are taxes. They are bad for business, and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty for the economy."
What's Next
More turbulence is to come. Trump said he would impose reciprocal tariffs around the world on April 2 as he seeks to equalize terms with all of America's trading partners.
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About the writer
Shane Croucher is a Breaking News Editor based in London, UK. He has previously overseen the My Turn, Fact Check ... Read more