A stress test for American relationships with friends and neighbourspublished at 18:48 Greenwich Mean Time 13 March

18:48 GMT 13 March

Michelle Fleury
BBC World News Correspondent in New York

Tariffs are stress-testing America's relations with its friends and neighbours.

Yesterday Donald Trump repeated his belief that the EU was set up to take advantage of the US. And he constantly refers to Canada as the 51st state.

Decades of close co-operation and working together are being upended by the US president.

In response to this change, Canada and the European Union both announced retaliatory action after Donald Trump increased tariffs on all steel and aluminium imports to 25 percent.

Through his Truth Social account, the president has indicated he won't tolerate any escalation. Today he threatened the EU with 200% tariffs on alcohol, while earlier this week it was Canadian metal in his sights.

Other countries are taking a different tack. Britain has not retaliated, hoping it can negotiate away the tariffs as part of a grand bargain on trade.

US retailers may have stocked up in anticipation of tariffspublished at 18:37 Greenwich Mean Time 13 March

18:37 GMT 13 March

Douglas Fraser
Scotland business & economy editor

Image source, Getty Images

Scotch whisky is a big part of the alcohol trade heading west from this side of the Atlantic, and because the UK has left the European Union, it is not caught in the net of a US-EU trade dispute.

That's an opportunity for Scotch makers - or Japanese distillers - to grab market share from Irish and Canadian spirits. But it's not one that Scotch exporters will be shouting about too loudly.

They know they could be caught in Donald Trump's tariff net any time, or whenever he wants to pick a fight with the UK government.

Distillers have worked together to get tariffs down and keep them down in recent years.

Bourbon producers in Kentucky found common cause with Scotch whisky distillers during the last Trump term, when a 25% tariff was put on single malt whisky from the EU, which the UK was still a member of at the time. That tariff, linked to the dispute over state subsidies for Boeing and Airbus, was suspended under Joe Biden's administration, but not cancelled.

One tactic they all learned from the last time was to get ahead of tariffs when they're looming. Don't be surprised to find there are very high stocks of French wine and Scotch whisky already inside the USA.

Jonathan Josephs
BBC business reporter

American retailers are clearly concerned about the growing impact of tariffs and the uncertainty they are causing as President Trump continuously announces new policies.

The president of the Retail Industry Leaders Association, Brian Dodge, tells the BBC that things are "escalating so quickly that the opportunity for any preparation is really going out the window".

The group's membership include major US firms such as Walmart, Nike, Costco and Dick's Sporting Goods, and Dodge says: "When you ultimately increase costs - as tariffs do on products - that's going to find its way into the prices that consumers will ultimately pay."

Citing the example of a ladder which is made of aluminium or steel, he explains that some products could face multiple tariffs of up to 70% of their value.

This, he says, is “simply not sustainable" for businesses if they don't pass those costs on to their customers.

Mike Wendling
Reporting from Chicago

Image source, Cedar Ridge

Even if a truce is called in this trade war, small businesses will still run away from uncertainty, says one craft whiskey maker.

Jeff Quint, founder of Cedar Ridge Distillery in eastern Iowa, tells the BBC that his company would love to sell its spirits in the EU and Canada, as it has at times in the past. But right now, the environment is just too unstable.

"It's a three-to-five-year investment any time you enter a new market," he says. "You're not going to make those long-term investments when you have short-term instability."

American whiskey makers faced EU tariffs during Trump's first term, but even if negotiations limit or end the duties, any lingering threats will cool thoughts of international expansion.

"We're just going to turn our attention to domestic opportunities and away from global strategies," Quint says.

He notes that larger distilleries with existing global business might make different moves. However for smaller craft producers, a focus on the US market will mean a "glut of bourbon".

That could mean lower prices for American drinkers looking for a premium tipple, he says, but the news is less good for producers.

"We're collateral damage," Quint says. "I can see both sides... but we didn't have a dog in this fight and suddenly it's all about us."

Bernd Debusmann Jr
Reporting from the White House

Trump has now turned his attention to the European Union, which yesterday announced its own tariffs in retaliation for US tariffs on steel and aluminium.

"We're not allowed to sell cars there," Trump says of Europe. "The European Union is very nasty."

Speaking alongside Ireland's Prime Minister yesterday, Trump said that he will "of course" respond with further tariffs on the EU.

"The tariffs are very important," he added.

Earlier today, Trump shared on social media that he would put a 200% tariff on European alcohol, in response to the EU's retaliatory tariffs on American whiskey.

Bernd Debusmann Jr
Reporting from the White House

Trump has also directly touched upon Canada during his Oval Office meeting with Nato's Secretary-General.

"We don't need anything they have," the US president says of Canada, adding that he believes the nation would be a good addition to the United States.

“We don’t need their lumber, we don’t need their energy," he says.

Trump also acknowledged that there would be "disruption" as a result of the tariffs and counter-tariffs.

"But it won't be long," he says.

Bernd Debusmann Jr
Reporting from the White House

US President Donald Trump is in the Oval Office at the moment, meeting with Nato Secretary-General Mark Rutte.

The meeting is still ongoing - and it is not being broadcast live - but we're starting to get a few lines emerging from inside thanks to the White House press pool.

Most of the questions have so far focused on Ukraine.

Trump, however, did briefly remark on tariffs - and appears to be firm on his position.

“I’m not going to bend at all," he told reporters.

Jennifer Clarke
BBC News

Tariffs are a central part of Trump's overall economic vision.

He says tariffs will boost US manufacturing and protect jobs, raising tax revenue and growing the domestic economy.

He also wants to restore America's trade balance with its foreign partners - reducing the gap that exists between how much the US imports from and exports to individual countries.

But he has refused to rule out the prospect of a recession as a result of his trade policies, which sent US stocks sharply down in the days before the metal tariffs took effect.

US Commerce Secretary Howard Lutnick later said the tariffs were "worth it" even if they did lead to an economic downturn.

Trump's tariffs initially targeted goods from China, Mexico and Canada.

These accounted for more than 40% of imports into the US in 2024.

But Trump has accused the three countries of not doing enough to end the flow of migrants and illegal drugs such as fentanyl into the US.

All three countries have rejected the accusations.

• Read more: What are tariffs and why is Trump using them?

The inclusion of wine and whiskey in the latest round of tariff wars is highly symbolic - there are few consumer goods more iconic than French Bordeaux or Tennessee whiskey.

However from a value standpoint, drinks are less important than some other types of items, some of which are also facing tariffs.

The Distilled Spirits Council of the United States says that in 2023, about $705m worth of American whiskey was sent to the EU. Several times that in wine goes the other way - about $4.5bn.

But those figures are far outweighed by items including drugs, cars and heavy machinery - as you can see in this chart:

John Campbell
BBC News NI economics and business editor

The Irish Whiskey Association says US tariffs have the "the potential to be devastating”.

Irish Whiskey has enjoyed a decade of spectacular growth with global sales more than doubling from 7.3m cases in 2014 to 15.6m in 2023.

The US is by far the biggest export market, taking 5.7m cases in 2023.

That trade is dominated by big brands like Jameson and Powers, but dozens of new craft distilleries have also been targeting the US market.

The association is represented in Washington DC this week as part of the St Patrick's Day celebrations.

In a statement, external it said President Trump's statement is "extremely concerning” and that a US-EU trade war puts jobs, investments and businesses at risk.

It has called on the EU and US to de-escalate, saying "the need to remove spirits from this dispute is immediate, and the clock is ticking."

Ana Faguy
Reporting from Maryland

Just outside of Washington DC, some liquor store employees and owners are anxious about any tariffs on alcohol.

Rhea Ashtamkar said her family may be forced to raise prices at their beer and wine store in Rockville, Maryland, if a 200% tariff on European alcohol comes to fruition.

“When it comes to the imported alcohols that people like, we like to keep our prices at a minimum and we’re known to have the cheapest prices in the area so [the tariffs] would really affect us,” she said.

Ashtamkar said about 20% of the alcohol sold in the store was from Europe.

She worries if tariffs start on European alcohol, would the same happen to alcohol imported from other places.

“If you get the stuff more expensive, you have to sell it more expensive, there’s nothing you can do to get an extra margin,” she said.

Michelle Fleury
BBC World News Correspondent, reporting from New York

If President Trump goes ahead with his 200% tariff threat on EU booze, it could really hurt high-end restaurants that make most of their profit from wine and drinks.

Prices would likely shoot up, and customers might balk at paying.

The US restaurant and wine industries have already felt the sting of tariffs before, like when Trump imposed a 25% tariff on European wines in 2019 over Airbus subsidies, though those were lifted in 2021.

Now, many in the industry are worried that bringing back these kinds of trade policies could have an even bigger impact.

Hugh Schofield
Paris Correspondent

Image source, Getty Images

French drinks-makers are panic-stricken by President Trump’s threats to put a 200% tariff on wines and spirits.

“It confirms what we feared,” said Nicolas Ozanam, head of the Federation of Exporters of Wines and Spirits.

“By making these threats we put ourselves in the firing-line. We are fed up with being systematically sacrificed for matters that have nothing to do with us.”

The EU earlier announced it would impose tariffs of 50% on various US goods, including bourbon whiskey, in response to US tariffs on EU steel and aluminium.

French foreign trade minister Laurent Saint-Martin said France would “not give way to threats, and will protect its exporters".

The US is the biggest foreign market for French wine, champagne and cognac, representing €3.8bn (£3,2bn) in sales in 2024. A big push in imports at the end of the year was probably to build stocks in the US ahead of feared tariffs.

Cognac producers fear that some of their number may go under if the 200% tariff comes in.

They have already been badly hit by a fall in the Chinese market, caused by Beijing’s reprisals against EU tariffs on electric cars.

The Distilled Spirits Council (DSC), a US trade group, is urging President Trump to secure a trade agreement with the EU for its sector.

The industry is getting sucked into the US-EU tariff dispute - as it was in Trump's first term. The EU is planning to put tariffs on American whiskey in response to US steel and aluminium tariffs. That caused Trump to threaten 200% tariffs on EU alcohol entering the US.

"We want toasts not tariffs," DSC president and CEO Chris Swonger says in a new statement sent to the BBC, adding the US spirits sector "supports more than $200 billion in economic activity, 1.7 million jobs".

"We urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs, which will create US jobs and increase manufacturing and exports for the American hospitality sector," he says.

Yesterday, in response to the EU's measures, Swonger said the US and EU spirits sectors enjoyed "fair and reciprocal" and tariff-free access between 1997 and 2018. Swonger says Transatlantic trade in spirits "increased by nearly 450% during this time".

Swonger said the EU's plans to tax the import of American whiskey were "disappointing" and warned they will "severely undercut the successful efforts to rebuild" those exports.

Bernd Debusmann Jr
Reporting from Washington

Image source, EPA

Treasury Secretary Scott Bessent spoke to reporters at the White House just a short while ago - answering a question about tariffs.

In response, Bessent repeatedly defended tariffs as being good for the US economy, saying they will ultimately "protect the American worker".

"I'm less concerned about the short-term," he said.

He also criticised Democrats, accusing them of threatening the US with a government shutdown.

"Democrats are in disarray," he said. "This is the story for the next few days".

We've still not heard from Donald Trump outside of his social media posts. The president has a meeting with Nato Secretary-General Mark Rutte at 12:20 EST (16:20 GMT).

The White House press pool will be attendance for a portion of that. These events often turn into extended question-and-answer sessions.

Trump doesn't have any other public events planned today, although he is expected to have a working lunch with Rutte following the meeting.

We'll be headed to the White House shortly and will bring you the latest from there.

Shares in some European alcohol producers have fallen after Trump threatened a 200% tariffs.

Luxury giant LVMH, which owns Hennessy cognac and several champagne houses including Dom Perignon, initially saw its shares fall by about 1.4% in afternoon trading, before a partial rebound.

Shares in French drinks group Pernod Ricard, which owns two champagne houses and Jameson Irish Whiskey, have dropped by about 3.4%.

Spirits giant Diageo, which also owns Guinness, saw a far more modest drop of 0.5%.

Natalie Sherman
New York business reporter

Treasury Secretary Scott Bessent has dismissed concerns about the cost of the fight, warning that a trade war was likely to inflict more economic pain on the EU than on the US.

“One or two items, with one trading bloc – I’m not sure why that’s a big deal for the markets,” he says on the US business broadcaster CNBC.

“In the event that there’s a back-and-forth with tariffs, I would counsel these government leaders that they are on the losing side economically.”

Bessent suggests there might be room for negotiation in some areas – but not steel and aluminium, which sparked the latest clash.

“We have identified some strategic industries – steel and aluminium, likely autos – but everything else is up for grabs,” he says in response to a question about the possibility of the trade fights leading to lower trade barriers.

Moment of jeopardy for Europe and USpublished at 14:25 Greenwich Mean Time 13 March

14:25 GMT 13 March

Paul Kirby
Europe digital editor

Image source, Getty Images

There is a consensus from drinks producers in the EU and the US that nobody stands to gain from tariffs on alcohol.

Whether it's cognac and champagne from France or prosecco and chianti from Italy, or indeed bourbon from Louisiana, any tariffs are going to hurt.

It's not too late to draw back, and António Costa, who's head of the EU's Council of 27 of member states has appealed to the US to de-escalate.

But this is a moment of jeopardy for both sides. The EU says it shares with the US "the biggest trade relationship in the world", and Brussels argues that the EU is not the problem and it has no choice but to respond to US tariffs on steel and aluminium that came into force at midnight on Tuesday night.

President Trump is angry with the EU's response, which will come in two steps.

Initial measures, due to come in on 1 April will hit US imports of jeans, motorbikes, peanut butter and bourbon. These were tariffs that were partly imposed during Trump's first presidency.

But the EU is going to consult on a vast swathe of new measures too, which would come into effect in mid-April. The list is 99 pages long and could include wines and spirits alongside toilet seats, lawnmowers, swimwear and even chandeliers.

Image source, EPA

The US commerce secretary says the EU's move to raise tariffs in response to America's own tariffs is "disrespectful".

Speaking to Bloomberg, Howard Lutnick says: "The president has made it crystal clear that he finds this tit-for-tat really abusive and aggravating.

"His objective is steel and aluminium tariffs. Let him build his steel and aluminium business in America, because that's important."

Addressing the EU response, he adds: "I find all this back-and-forth really off the topic. The key topic is rebalancing American trade."

He says the president was "totally annoyed" at the Europeans.

"Why are Europeans picking on Kentucky bourbon or Harley-Davidson motorcycles? It's disrespectful," Lutnick says.

Asked about the prospect of Trump threatening his own tit-for-tat 200% tariffs on European alcohol, Lutnick says Trump makes the final decisions.

"He wants these countries to respect him. And all this showed you is that Europe and Canada do not respect Donald Trump and do not respect America's ability to build its steel and aluminium industry, which is vital for national security ," he says.

Natalie Sherman
New York business reporter

The liquor industry is familiar with the costs of this fight.

During Trump’s first term, he hit aluminium and steel with tariffs. It prompted retaliation from the EU, including a 25% tax on American whiskey.

The measure led American sales of the liquor in the EU to drop 20% between 2018 and 2021, dropping from $552m (£426m) to $440m, according to the Distilled Spirits Council of the US.

The tariff was lifted – and sales bounced back - after the two sides struck a deal that exempted a certain amount of European metals from the duties.

But Trump ended that carve-out on Wednesday and has indicated little appetite for deal-making when it comes to steel and aluminium.