U.S. duties on steel and aluminum officially open U.S.-EU trade war

After those with Canada and Mexico, and the one with China, among various confirmations, threats and suspensions, the U.S. is also officially opening, or rather reopening, the EU front of the war on tariffs, starting with steel and aluminum. In these hours, in fact, the US-wanted tariffs, at 25%, on steel and aluminum from abroad, including the EU, which has announced a “strong but proportionate” response. Specifically, explains the EU Commission, which says it “regrets” the decisions of these tariffs, “considering them unjustified, disruptive to transatlantic trade and harmful to businesses and consumers, often resulting in higher prices”, the European response will be in two phases. “First, the Commission will let the suspension of the existing 2018 and 2020 countermeasures against the United States expire on April 1, 2025. These countermeasures cover a range of U.S. products in response to the economic damage to €8 billion of EU steel and aluminum exports. Second, in response to new U.S. duties affecting more than 18 billion euros of EU exports, the Commission is presenting a package of new countermeasures on U.S. exports. They will enter into force by mid-April, after consultation with Member States and stakeholders”.
In total, the EU’s countermeasures could then apply to U.S. goods exports worth up to 26 billion euros, in line with the economic scope of the U.S. duties. In the meantime, the EU, the Commission explains, “remains ready to work with the U.S. administration to find a negotiated solution. The above measures can be lifted at any time should such a solution be found”. But what is really feared is a further escalation on other sectors, starting with cars, as announced by Trump himself in recent days, which will be in effect from April 2, including those related to food, agriculture and wine.
And it is precisely on wine, which in 2024 recorded a record export for Italy, at 8.1 billion euros (+5.5% on 2023, according to final Istat data analyzed by WineNews), especially thanks to growth in the U.S., for 1.9 billion euros (+10.2%), that the Unione Italiana Vini - Uiv led by Lamberto Frescobaldi returns to raise the alert. “The damage for Italian wine with the hypothesis of duties at 25% could be around 470 million euros only for the direct effects of U.S. demand, not counting the indirect ones on global exports that move the bill to almost 1 billion euros,” Uiv reiterates, in an analysis by its Observatory on the impacts of the new tariffs announced by the Trump administration for European agriculture, considering dangerous the assumption that our wines - as “Italian and luxury” - do not run risks of downsizing by star and stripes demand (as we can also read between the lines in the words of the Minister of Agriculture, Francesco Lollobrigida, in our interview in relation to the whole made in Italy agribusiness). According to UIV, at least 80% of Italian wine is in fact at risk of a real leap in the dark: this is what makes up the backbone of Italian exports to the United States and cubes as much as 2.9 million hectoliters (out of a total of 3.6 million). Nearly 350 million bottles of tricolor wine that are concentrated in the “popular” bands, equivalent to an ex-cellar price of 4.18 euros/liter and that at retail turn into an average - after transportation, duties, mark-ups at distribution - in a price range that does not exceed $13 a bottle. On another dimension travel luxury wines, which concern, howeverm a 2% share of total exports by volume (8% of value) and which may all in all be less subject to purchase reductions.
“Italian wine in the U.S., which is worth about 2 billion euros with a 24% share of our total world shipments, is made up of products with a strong identity”, comments UIV president Lamberto Frescobaldi, “which, together with a winning quality-price ratio, have contributed to the success of Made in Italy wine. The backbone - net of flagship wines - is this and primarily represents a mid-range positioning, with possible price fluctuations dictated by duties that expose supply to possible demand migrations. In UIV’s opinion”, Frescobaldi added, “it is very important to be able to act with a “contingency plan” based on 3 levels: the first, negotiating, aimed at not including wine in reciprocal lists of products subject to trade barriers; the second, community, which sets up compensatory and promotional measures; the third is national and will inevitably have to address the issue of production containment”.
According to the Uiv Observatory, official data say that the average export price to the U.S. is 5.35 euros per liter for Italian wine, but only 30% of “popular” wines are all in line (5.26 euros), while more than half are well below the threshold (3.53 euros). Additional tariffs of 25%, not handled in fairness between counterparts, would end up jolting these wines to the next higher bracket, the “premium”. Basically, the bulk of Italian production: from Pinot Grigio to Prosecco, from Chianti to Lambrusco, from Moscato d’Asti to Sicilian wines, to wines from the vast majority of Italian regions. The premium segment, which today is worth 17% volume of total exports (with average ex-cellar price of 8.80 euros/liter and retail price point varying from 13 up to 30 dollars a bottle), would obviously not be able to absorb “epochal” transfers of references from below.