BRUSSELS — In the end, it’s always about the booze.
Europe’s trade war with Washington has barely started, but some EU leaders are already dropping their weapons and fleeing the battlefield in a bid to escape Donald Trump’s tariff onslaught against their exporters.
In the week since the EU executive announced it would retaliate against the U.S. president’s steel and aluminum duties, the leaders of France, Italy and Ireland have publicly criticized its strategy, which includes reinstating tariffs on bourbon whiskey that date back to 2018 from the start of April.
In a one-two punch, Ursula von der Leyen’s European Commission wants to add a second round of tariffs worth €18 billion on U.S. exports by April 13.
Trump has been quick to escalate, threatening to slap an eye-watering 200 percent tariff on all wines, champagne and alcoholic products coming from the EU.
Italy’s Prime Minister Giorgia Meloni is now warning against a “vicious circle” of trade escalation. Her French counterpart, François Bayrou, has accused the Commission of “hitting the wrong targets.” And Ireland’s leader Micheál Martin has criticized the executive for resorting to its retaliation playbook from a similar trade fight in Trump’s first term from 2017 to 2021.
It’s no coincidence that these countries are exposed to the tariffs Trump has threatened on alcohol: France, Italy, Spain, the Netherlands and Ireland are the EU countries that export the most booze to the U.S.
It gets worse
Clearly, the EU’s initial unity on trade is crumbling before it has even agreed on a second, larger tariff package planned for mid-April to respond to Trump’s new (and broader) steel and aluminum tariffs.
In his first term, Trump set U.S. tariffs on steel at 25 percent and on aluminum at 10 percent. This time he has fixed both at 25 percent — and has expanded their scope. Brussels calculates the total damage at €26 billion, and wants its retaliation to “mirror” that figure. It is seeking public feedback on a 99-page list spanning food, beverages, household goods and industrial gear.
“It was always to be expected that there would be cracks in European unity when it comes to trade, because not all European countries are exposed in the same way to [a] potential trade war or U.S. tariffs,” said Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations.
“Every country will be very happy to have retaliatory measures against the U.S. until they realize that they harm their domestic economy. That is going to be the challenge for the EU Commission, to go for the toughest possible measures while keeping everyone on board,” she added.
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Good cop, bad cop
The Commission has been here before.
“In trying to be smart about hitting the U.S., not hitting ourselves, we are also making sure that we sort of spread the pain and spread the impact as much as we look to minimize it,” said a senior EU official last week when the Commission unveiled its expanded tariff list.
“To be clear, we’re also spreading them across various member states in a very fair manner,” they added.
As often when it comes to navigating prickly trade tensions with the likes of China and the United States, the Commission, which calls the shots on behalf of the EU’s 27 countries, is the one waving the big stick, launching investigations and imposing duties.
And so it happens, even as their diplomats back the Commission’s retaliation strategy behind closed doors in Brussels, that national leaders sound off — as Meloni did to Italian lawmakers on Tuesday — in an attempt to avoid the wrath of an antagonistic Trump.
“There’s the necessity also to have messages that are politically palatable for domestic audiences,” Demarais explained. “Some countries are playing this game masterfully; of the divergence between declarations, which may be for domestic political reasons, and the reality of what is going to happen.”
The same dynamic played out last year as trade tensions escalated with Beijing over electric vehicles — and a decade ago over solar panels.
Responding to the imposition of EU duties on made-in-China electric vehicles in October, Beijing retaliated against premium European distilled alcohol. Everyone realized that the real target was French cognac, and that China was punishing Paris for nudging the Commission to launch an investigation that found evidence of unfair state aid to Chinese EV-makers.
“The French are the most vocal. They’re the most offensive in defending their interests, which is why they get more retaliation. This is a classic example which we’ve also seen with China,” said one EU diplomat, granted anonymity because they were not authorized to speak on the record.
Germany, Spain and Belgium, meanwhile, rushed to send high-level officials to Beijing to showcase their friendly ties with China. They often returned home touting symbolic concessions from President Xi Jinping — on visas, for example, or pork.
“It’s a classic case of defending your economic interests,” a second diplomat observed.
Giovanna Coi contributed reporting.