Some of Europe’s top luxury brands are targeted in US President Donald Trump’s latest tariff salvo, which could affect billions of US dollars in exports of US-bound whiskeys, wine, Champagne, handbags and men’s suits.
A panel of three WTO arbiters, as expected, on Friday last week said that the US can legally impose tariffs on an array of European exports in retaliation for illegal government aid to Airbus SE.
EU sources say they expect the WTO arbiters to publicly circulate a report by the end of the month that would allow new US duties on US$5 billion to US$7 billion of goods per year, while Trump has threatened tariffs on US$11 billion.
Washington’s response is expected within days after the WTO’s green light for retaliation.
The US has identified possible targets — with tariffs potentially as high as 100 percent — on a list of goods with a total export value of US$25 billion a year.
Though the most valuable goods on the US list are exports of European aircraft and parts, the tariffs could also hit products made by Europe’s most recognized high-end brands.
LVMH Moet Hennessy – Louis Vuitton SE is particularly vulnerable to the proposed US levies, which target two of its primary product lines — wine and spirits such as Dom Perignon, Moet & Chandon and Hennessy — and leather goods under labels such as Givenchy, Kenzo and Louis Vuitton.
The US market for luxury goods is among the top destinations for European companies such as LVMH, where the US made up almost a quarter of its total global sales last year.
US shoppers bought 11.2 billion euros (US$12.33 billion) of goods from LVMH last year, Bloomberg data showed.
Any new tariffs would increase costs that would undoubtedly be passed on to US consumers, Remy Cointreau SA chief financial officer Luca Marotta said.
Trump’s planned EU tariffs are unique for his administration because, unlike the trade dispute he started against China, the US would be applying duties explicitly authorized by the WTO, an organization he has threatened to withdraw from if it does not reform.
European beverage producers are already reeling from the uncertainty stemming from Trump’s repeated threats to slap new tariffs on wine, liquor and other alcohol.
The Trump administration is evaluating whether to penalize French wine and other goods in response to France’s tax on digital companies such as Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google.
“The degree of uncertainty has somewhat notched up a little bit,” Pernod Ricard SA chief executive Alexandre Ricard said.
Trump’s tariffs would also have an unwelcome impact on Scotch whisky producers, which are already girding for the fallout of a potentially messy “no-deal” Brexit.
The EU exported US$2.1 billion of Irish whiskey and Scotch to the US last year, according to data from the Geneva, Switzerland-based International Trade Center.
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