California wine, cars, and spirits could see 50% price hike if EU tariffs hit

Washington D.C. – As the clock ticks toward a critical July 9 deadline, the European Union is bracing for President Donald Trump’s decision on whether to enact steep new tariffs on EU-made goods — a move that economists warn could have lasting effects on both sides of the Atlantic.

The tariffs in question — floated as high as 50% — would apply to European exports ranging from French cheese and Italian spirits to German automobiles and Spanish pharmaceuticals. For now, the rate sits at 10%, a temporary pause Trump granted in April after markets reeled from his announcement of an initial 20% levy on EU imports.

But that pause is set to expire, and talks between U.S. and EU officials have failed to deliver a breakthrough. Trump has repeatedly voiced frustration with Europe’s trade surplus and its regulatory barriers to American agriculture. And while both sides continue negotiating, European leaders say they are prepared to strike back with their own tariffs on American products like beef, beer, and Boeing aircraft.

What’s at stake is more than political brinkmanship. The U.S. and EU share what is widely considered the world’s most important commercial relationship — with $2 trillion in goods and services traded last year alone. That economic interdependence means any disruption could ripple far beyond policy circles.

For European exporters, the prospect of U.S. tariffs as high as 50% would likely price out many products in the American market. For U.S. consumers, it could mean higher prices on everyday goods. Auto dealers, for instance, are already warning that prices on 2025 model-year German cars could rise significantly. Some companies — like France’s LVMH — are exploring whether shifting production stateside could blunt the impact.

But the burden won’t be equally shared. While EU regulations are rigid and broadly shaped by member-state consensus, the U.S. wields more unilateral power in trade matters. That imbalance leaves American consumers particularly vulnerable, even if Trump is positioning tariffs as a way to bring manufacturing jobs back to U.S. soil.

According to projections from Brussels-based think tank Bruegel, the EU economy would shrink by 0.3% if tariffs rise to 25%. The U.S. economy, however, could contract by 0.7% — more than double the damage — underscoring the uneven risk of escalation.

For now, diplomats on both sides are hoping to avoid that outcome. A framework deal remains possible, one that would preserve the 10% baseline tariff and delay further escalation while negotiations continue. But the underlying tension — and Trump’s volatile posture toward allies — suggests that even if a truce is reached, the relationship between the world’s two largest economic powers is entering a more fragile phase.