Preparing for Trump’s Tariff Bomb: A Surge in Stockpiling of European Wines and Butter

US-EU Trade Tensions Lead to Increased European Exports Amid Growing Tariff Threat

As trade tensions between the European Union (EU) and the United States escalate, the export of European agricultural products such as French wine and Irish butter to the U.S. has seen a significant uptick. This surge in exports is largely attributed to American importers stockpiling these goods in anticipation of potential tariffs, following recent warnings from President Donald Trump regarding new trade policies. The trend highlights the economic uncertainties surrounding Trump's administration’s approach to international trade, which has raised fears of rising tariffs on European products.

In the period from January to November of last year, exports of EU dairy products to the U.S. reached a record high of 236,000 tons, marking the largest shipment volume since the European Commission began keeping track of data in 2010. Additionally, wine exports from the EU experienced an 18% increase compared to the previous year, coinciding with Trump's election victory in November.

The European Wine Producers' Association (CEEV) attributed this sharp rise in exports to a wave of anticipatory stockpiling by U.S. importers, who are bracing for the possible implementation of tariffs as part of a broader trade dispute between the U.S. and EU. With President Trump intensifying his rhetoric on tariffs and taking action through executive orders, U.S. businesses are acting quickly to secure their European supply chains before new tariffs take effect.

On February 13, Trump officially announced the policy of imposing reciprocal tariffs, which could impact all major trading partners, including China, Japan, South Korea, and the EU. This move aligns with his "eye-for-eye" strategy, where tariffs imposed by foreign governments on U.S. products will result in similar tariff increases on their goods entering the U.S.

The primary target of these measures appears to be the EU, especially after Trump criticized the EU's 10% tariff on U.S. automobiles while the U.S. imposes only a 2.5% tariff on European cars. Many analysts interpret this as an indication that the new tariff measures are particularly aimed at Europe. Trump's recent remarks about the European Union’s value-added tax (VAT) being more punitive than regular tariffs also underscore this focus on the EU.

The potential trade conflicts come at a particularly challenging time for European agriculture, which is grappling with the impacts of unstable weather patterns and soaring energy costs. High-value exports such as cheese and wine, which are major components of EU agricultural exports, are at risk of becoming significantly more expensive for American consumers if tariffs are implemented. The U.S. is the second-largest market for European agricultural exports, with EU exports to the U.S. valued at €27 billion in 2023 alone.

In the past, during Trump's first term, trade tensions also targeted specific European products, such as Spanish olive oil, German wines, and Irish whiskey, causing disruptions in trade. As the potential for similar tariff measures looms again, European dairy producers are especially concerned, given their significant exposure to the U.S. market.

John Rankston, a senior consultant at StoneX, remarked that the possibility of new tariffs has been on the horizon for some time, and European dairy producers are already well aware of the risks. He noted that in previous cases, companies that relied heavily on the U.S. market have been particularly vulnerable to sudden tariff increases.

Jukka Rikkitalo, Secretary General of the European Dairy Trade Group, expressed concern that U.S. tariffs would pose a considerable challenge for dairy producers heavily dependent on the American market. These producers face the dual burden of already rising costs due to internal European market conditions, such as high energy prices, making a tariff hike especially damaging.

Additionally, Ignacio Sanchez Recarté, Secretary General of the CEEV’s Trade Group, warned that the targeted tariffs on European wines during Trump’s first administration had caused losses exceeding €1 billion for the wine industry. He stressed that finding new markets to replace the U.S. could take a substantial amount of time and effort, leaving the industry exposed to both immediate financial losses and long-term uncertainty.

This shift in U.S. trade policy is already having a profound impact on European exporters, who are rushing to stockpile goods and mitigate the effects of the looming tariff threat. While many European industries are hopeful that the situation will stabilize, the growing volatility in international trade continues to strain relations across the Atlantic, with much at stake for both sides.