Don't put tariffs on champagne, France begs Trump
French EU diplomats hope to carve out €9bn (£7.8bn) of European wine and spirits exports from the broad 15pc tariff agreed on Sunday between the US president and Ursula von der Leyen, the European Commission president.
The trade deal only specifies an exemption for the aviation industry, but Eric Lombard, the French finance minister, said that 'this should also be the case for spirits'.
'This agreement is not complete. There is a base rate of 15pc, and exemptions, which are not yet fully detailed. Work continues, with France remaining vigilant to protect our industries as much as possible,' he said.
White House officials have reportedly downplayed the prospect of any further exemptions as the two sides look to thrash out the deal's details by this Friday, when the US will start levying tariffs.
But Brussels negotiators and industry representatives are still hopeful the two sides can nail down a 'zero-for-zero' tariff on spirits, which would also buoy America's $1.2bn (£900m) of liquor exports to Europe.
France's political elite have been highly critical of the trade deal, which was negotiated at the EU level rather than by each eurozone country. Francois Bayrou, the French prime minister, said it was a 'dark day' for the Continent.
Since then, France's wine industry has been ramping up the pressure on the EU to help carve out an exemption.
On Monday, Gabriel Picard, head of the French wine and spirits exporters' federation FEVS, said: 'Disaster has been avoided, but the coming days will be crucial for the sector. The agreement ... should confirm the restoration of bilateral trade free of duties for spirits, which we are eager to see confirmed.'
Laurent Saint-Martin, the French trade minister who was highly critical of the EU's handling of trade negotiations, also said that he expected to see spirits get an exemption.
Brussels may have an effective ally in Bernard Arnault, the French billionaire boss of luxury goods conglomerate LVMH, which owns cognac and champagne maker Moet Hennessy.
Mr Arnault attended Mr Trump's presidential inauguration in January and visited the White House in May. He has also pledged to open a new Luis Vuitton workshop in Texas.
Trade deal hangover
Champagne and cognac are helped by their special status as protected geographical brands, meaning there is no option to shift production to the US – one of the aims of Mr Trump's trade war.
If champagne producers win an exemption, they will have protected their access to a market that accounts for 18pc of their worldwide exports.
Cognac makers send 43pc of their exports to the US, and have only just seen off a threatened 35pc tariff on their sales into China, an even larger overseas market.
The wine industry faces a tougher fight.
European wine exports to the US dwarf what the Continent buys from California, creating a trade deficit that rankles with Mr Trump. In March, he threatened a 200pc tariff on European wine.
'When it comes to wines, everything is not yet settled. That is why we are encouraging the European Commission and France to fully commit to this final stretch, to obtain the reduction in customs duties on wines, a proposal supported by both American and European stakeholders,' Mr Picard said.
The European industry has been telling the US that a tariff would hurt American businesses.
'It is estimated that for every $1 generated by European wine exports to the US, American distribution and hospitality sectors earn $4.50,' said Ignacio Sanchez Recarte, head of the EU wine industry body CEEV.
'The €4.88bn EU wine exported to the US in 2024 would have generated roughly $22bn revenue for US companies.'
The Europeans aren't the only producers trying to bend Mr Trump's ear. John Swinney, the Scottish First Minister, used his meeting with Mr Trump in Scotland on Tuesday to urge an exemption for Scotch whisky from the 10pc tariff in the UK-US deal.
He said the tariff was costing the Scottish industry £4m a week.
'I believe there is now a window of opportunity to make the case for whisky. And at the invitation of the president, I intend to make further representation to him on this matter,' Mr Swinney said after the meeting.
His argument was that since there was no American substitute for Scotch whisky, it didn't make sense to tax it.
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