French industries, including drinks such as wines and spirits, and pharmaceuticals, are the most at risk if the US president enacts the tariffs.
The spectre of a transatlantic trade war looms again as US President Donald Trump has threatened to impose sweeping tariffs of up to 25% on all EU goods.
The potential move could send shockwaves through the French economy. In response, Brussels has signalled that it will be ready to retaliate.
The US is France’s fourth-largest customer and fifth-largest supplier in 2023, according to Natixis, a major French banking group.
Aeronautics, pharmaceuticals, wines and spirits together account for more than a third of French exports to the US, meaning these sectors are particularly vulnerable.
But the French spirits industry, valued at €3.9 billion in annual exports, is bracing for the worst.
Already between 2019 and 2021, a similar tariff war saw Trump impose 25% duties on French wines, later expanding the policy to cognac and other high-end liquors.
The results were catastrophic for the industry, with a 40% plunge in exports and a net loss of €500 million, according to industry figures.
Pharmaceuticals, the second-largest category of French exports to the US, could also be at risk.
Should the US move forward with tariffs, French pharmaceutical firms could face difficult decisions about whether to shift production elsewhere.
“The steel sector is already weakened, as is the automobile sector with the transition to electric vehicles,” said Christophe Blot, an economist at the OFCE, a French economic think tank.
“Meanwhile, industries heavily exposed to the US market — such as luxury goods and pharmaceuticals are particularly vulnerable,” Blot added.
How can France and the EU retaliate?
The EU has made clear that it will respond if Trump follows through with his threats. But economists warn that retorsion measures could backfire, penalising European consumers.
“If we do the same as Trump, we’re going to penalise French consumers. It’s not necessarily an ideal situation — it’s a game where everyone loses,” Blot told Euronews.
While France exports high-value goods to the US, its primary imports are hydrocarbons — oil and gas — worth €12.2 billion in 2023.
“France could try to use its energy imports as leverage in negotiations, potentially increasing its purchases of American hydrocarbons to ease tariff pressures,” suggested Hadrien Camatte, an economist at Natixis.
ADVERTISEMENTBack in 2018 during a previous trade dispute between Trump and the EU, the bloc imposed tariffs on distinctive American brands such as Harley-Davidson motorcycles, Levi’s jeans, bourbon, and Florida orange juice.
The European Commission could impose similar symbolic tariff hikes in response to the US, Camatte told Euronews.
What other countries could be most impacted?
While France would feel the sting of tariffs, Germany and Italy — Europe’s largest exporters to the US — would likely be hit even harder, Camatte said.
Both countries maintain substantial trade surpluses with the United States, making them primary targets for Trump.
ADVERTISEMENTAccording to research by Natixis, a 10% tariff hike could reduce economic output in Germany by approximately 0.5%, followed by Italy with 0.4% and France with 0.3%.
Despite the uncertainty surrounding the US president’s next move, economists caution that the EU should brace for more tariff hikes.
“At this stage, these are just threats, with no clear timetable or details,” said Sébastien Jean, an economist specialising in international trade.
“But given the repeated declarations and signals from the White House, it would be surprising if the US did not impose tariffs on EU imports, beyond those already planned for steel and aluminium,” he concluded.
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