Faced with Trump's new tariff, French wine producers expect rough times ahead

CHABLIS, France (AP) — France’s wine producers are deeply concerned that the 20% tariff slapped by President Donald Trump will deal a severe blow to the sector that relies on the U.S. as its top market.

French President Emmanuel Macron on Thursday warned of “massive” impact as he met with representatives of the most affected industries, including wine and spirits.

Vincent Dampt, owner of a wine domain in Chablis, in the Burgundy region, called the tariffs “bad news."

“But it could be worse,” Dampt added. “I was really stressed with the possibility of having this 200% tariff.”

Trump had threatened last month a 200% tariff on European wine, Champagne and spirits if the EU went forward with a planned tariff on American whiskey.

A preferred negotiated outcome

Dampt suggested he preferred a negotiated outcome between the EU and the U.S., saying a full on trade war is bad for business.

“We’re not at school,” he said. “If you answer too quickly with the same violence, it’s not constructive.”

A third generation winemaker, Dampt ships about 30% of his production to the U.S. — roughly 25,000 bottles. A drop in sales there would severely impact his business.

Chablis white wine was also the target of tariffs under the first Trump administration at the height of the spat between aviation giants Boeing and Airbus.

There's only one way for Dampt to fight back and maintain a presence in the U.S.: bring down his prices and cut his profit. But he said "it's not an easy thing to do" especially now when he had already lost about 50% of his crop last year, mostly due to hail storms and killer frost.

The wine industry will be hard hit

The Bourgogne Wine Board said in a statement it expects the industry to be “heavily affected” because the U.S. is the leading export market of wines from Burgundy.

“While this new measure will affect exports, potentially costing Bourgogne wines up to 100 million euros, it will not bring trade to a sudden halt, as would have been the case with higher tariffs," the trade association noted.

The U.S. remained last year the largest export market for wines produced in the EU, with 4.88 billion euros ($5.36 billion), the Comité Européen des Entreprises Vins (European Committee of Wine Businesses), or CEEV, said in a statement. Exports to the U.S. accounted for 28% of the EU’s total wine export value, it said.

The new tariff would create "economic uncertainty and result in layoffs, deferred investments and price increases,” said Marzia Varvaglione, CEEV president. “There is no alternative wine market that could compensate the loss of the U.S. market."

Macron attacks ‘brutal’ decision on tariffs

Macron denounced the tariffs as "brutal and unfounded.” In addition to the wine industry, the meeting at the Elysee palace gathered representatives from aeronautics, chemical and metal sectors, electronics, health, luxury, cosmetics and food industry.

Macron said France is likely to be slightly less impacted than some of its neighbours, because exports to the U.S. represent 1.5% of France's GDP, while they represent over 3% for Italy and 4% for Germany. Yet, “it’s not a small thing,” Macron said.

He emphasized that the U.S. economy will first experience the negative impact of the tariffs.

“One thing is certain, with that decision, the U.S. economy and Americans, businesses and citizens, will emerge weaker and poorer than yesterday,” Macron said.