KEY POINTS

  • Trump has threatened to impose a 100% tariff on various French goods, including Champagne
  • France exports $770 million of Champagne to the U.S. annually
  • U.S. importers worry the tariffs will cost jobs

The Champagne that millions of Americans will drink to toast in the New Year could become more costly if U.S. President Donald Trump imposes a 100% tariff on French -- and other European -- goods such as wine, cheese, cosmetics, and the famous bubbly by the middle of next month.

The tariff could also lead to job cuts in the U.S.

Trump has threatened the hefty tax in retaliation for France’s plan to slap a digital tax on U.S. tech giants like Facebook (FB) and Amazon (AMZN) for their operations in France. The White House also wants to punish the European Union for paying aircraft subsidies to Airbus, which it claims is unfair to U.S. aircraft maker Boeing (BA). The World Trade Organization ruled the subsidies “illegal.”

In October, the Office of the U.S. Trade Representative enacted a 25% tariff on certain wines from France, Spain, Germany and the United Kingdom. However, that decision did not include sparkling wines like Champagne or wines with more than 14% alcohol content. Now, the next round of tariffs could target all wines manufactured in the EU.

French Finance Minister Bruno Le Maire called the U.S. tariff threat “simply unacceptable. It’s not the behavior we expect from the United States toward one of its main allies.”

French sparkling wines account for nearly 700 million euros ($777 million) in annual exports to the U.S., representing about 40% of all French wine exports to the U.S.

Now with more tariffs possible, Americans who work in the wine industry and in ancillary businesses are worried.

Robert Tobiassen, president of the National Association of Beverage Importers, said 100% tariffs “would be devastating, absolutely devastating.”

"These tariffs on EU wines and spirits are going to impact consumers across all price points, from entry level spirits to luxury level," warned Michael Bilello, a senior vice president at Wine & Spirits Wholesalers of America, an industry trade group. "We're talking about a trade with 88,000 American jobs."

Bilello added the taxes "could disrupt the trends in the industry that have been very positive and led to growth."

Rocco Lombardo, president of Wilson Daniels, a California importer, said: “If 100% tariffs went into place, it would be catastrophic for the wine industry in America.”

Lombardo’s firm is investing in more inventory to hedge against potential further tariffs.

“We’re looking at investing up to 12 months of floor stock inventory just so that we can hopefully see this to an end where both sides find an amicable resolution, where tariffs are not a part of doing business,” he said.

Meanwhile, French wine representatives are criticizing Trump’s drastic policies while imploring French President Emmanuel Macron to find a quick solution.

Earlier this month, Federation des Exportateurs de Vins et Spiritueux, also known as FEVS, which advocates for French wine and spirits exporters, asked Macron to take "all the necessary initiatives, at the national, bilateral and international levels, so that our sector does not pay the price for the economic and political choices made by [the French government]."

John Bojanowski, an American who makes wine in France, said his product could rise by 25% in price per bottle in the U.S. if Trump’s tariffs become effective.

“I guess we’d pull back in the U.S. market,” he said. “I don’t want that. I do a lot more work in the U.S. market since we aren’t big enough to advertise. I personally visit distributors and focus on my home state of Kentucky and on secondary markets like Rhode Island and Maine. I like the niche we have in those places.”

Bilello of Wine & Spirits Wholesalers of America further warned that 100% tariffs will likely double the cost of French sparkling wine for U.S. consumers, meaning “demand will begin to drop.”

At the ground level in the U.S., the tariffs could cost jobs.

"The longer the current tariffs that are in place last, and if there are new and increased tariffs, people will begin to see prices creep up," said David Kenney, vice president of Uncorked Wines of New Orleans. "We're planning for a potential downturn in business. If things play out the way we're speculating, instead of a 15% increase in sales, we may see a 15% downturn. We're potentially erasing any gains next year, possibly going backward a little, and that would limit or reverse our decision to hire more people. Depending on the tariffs, we might have to lay off people."

Tobiassen of National Association of Beverage Importers said the October tariffs are already being felt by small U.S. importers.

“It’s a lot of small importers who don’t have a wide inventory who are being hurt,” he said. “Large and medium size importers are also facing challenges to manage the additional tariffs and still keep prices at a level where their products in the marketplace can maintain their market share at the retail level. Jobs are being lost as we speak.”