Once the United States has imposed tariffs on its major trading partners it could engage in bilateral talks with countries on new trade arrangements, Secretary of State Marco Rubio said on Sunday.

U.S. President Donald Trump threatened on Thursday to slap a 200% tariff on wine, cognac and other alcohol imports from Europe, opening a new front in a global trade war that has roiled financial markets and raised recession fears.

Rubio said the United States would retaliate against nations that had imposed tariffs on it.

"This is global. It's not against Canada, it's not against Mexico, it's not against the EU, it's everybody," he told the CBS show "Face the Nation."

"And then, from that new baseline of fairness and reciprocity, we will engage - potentially - in bilateral negotiations with countries around the world on new trade arrangements that make sense for both sides," he continued.

Rubio, who did not give details of what the new deals could look like, said the United States would "reset the baseline" to ensure it was treated fairly.

"We don't like the status quo. We are going to set a new status quo, and then we can negotiate something, if they (other nations) want to," he said. "What we have now cannot continue."

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Trump Makes Canada Free Again

The ongoing trade imbroglio occasioned by President Donald Trump's aggressively tariff-forward policy stance is roiling global markets across industries. The alcohol sector is being particularly hard hit, as many industry watchers warned could happen in the event of Trump-initiated trade wars with the European Union, Mexico, and Canada.

While the latest developments—including the president's threat earlier this week to impose a 200 percent tariff on European alcohol—are par for the course when it comes to the economic fallout of tariffs, Canada's retaliation to Trump's tariffs could cause long-term damage to American alcohol markets. Unique features of the Canadian system of alcohol regulation could dry up American alcohol sales within our northern neighbor's borders for decades.

In response to Trump's 25 percent tariff on Canadian goods, the Canadian government decided to pull all U.S. alcohol from the shelves of its provincial-run alcohol stores. Both the U.S. and Canada regulate alcohol at the sub-national level, but with a key difference: While most American liquor stores are privately owned (except in the remaining 17 retail control states), all but two Canadian provinces rely on government-run liquor stores.

Government-controlled alcohol stores are notoriously bad for freedom, but they prove surprisingly handy in an international trade dispute in which a country wants to inflict maximal pain on its neighbors. Having a system of government-owned stores allows entire swaths of Canada to effectively lock American alcohol out of the marketplace entirely. Rather than just making American whiskey 25 percent more expensive in Canada, it may no longer exist inside the country's marketplace.

Jack Daniels' CEO Lawson Whiting called Canada's move "worse than a tariff because it's literally taking your sales away completely, removing our products on the shelves." Canada is currently the U.S. alcohol industry's number two export market, with the province of Ontario alone accounting for around $1 billion in American alcohol sales each year.

The impacts have already been immediate, with distilleries like Michter's in Louisville announcing $115,000 in canceled bourbon orders, while liquor giant Diageo is estimating losses of up to $200 million. Craft distilleries near the border—like those in Buffalo and Washington state—could suffer the most, given both their small size and their interconnectedness with the Canadian market.

Up until recently, Canadian whiskey was losing market share to American bourbon within Canada's borders—a trend that one can now expect to reverse, as Canadian consumers rally around the flag in a bout of "buy local" boozy patriotism. (One Canadian brewery even debuted its "Presidential Pack," which contains 1,461 beers, enough for the buyer to have one for each remaining day of the Trump administration).

For its part, Canada struggles under its own thicket of overly burdensome and competition-hampering domestic alcohol regulations. Predictions of a "booze revolution" are spreading across the country as calls increase for the Canadian government to liberalize the country's alcohol markets, as evidenced by the recent decision to remove internal alcohol trade barriers between provinces.

While many Canadian craft alcohol producers bemoan the difficulty they face in getting their products carried in the provincial-run stores, that too may be poised to change with the advent of a renewed deregulatory ethos inside the country. As one Canadian micro-distiller put it: "We happen to have a lot of shelf space right now. They've just removed all of these American spirits." 

The alcohol trade wars are hurting America in the normal ways one would expect tariffs to, but they're also having the unintended consequence of focusing the minds of Canadian government officials to deregulate their own bad booze laws—which, while good news for Canada, will just hurt American producers even more. 

Trump promised to "Make America Great Again," but the main effect of his tariff policies could actually be to Make Canada Free Again.

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President Donald Trump is escalating the trade war with Europe by threatening steep tariffs on imported alcohol. A wine and beer bar located in the Village of Hamburg is preparing for the worst, saying its business might be in jeopardy.

On Thursday, Trump threatened a 200% tariff on European wine, champagne, and spirits. This came in response to a European Union plan to impose tariffs on American whiskey and other products next month.

“This definitely came as a huge shock to us,” said Nicole Cassell, one of the owners of Alchemy Wine and Beer. “Of course, tariffs have been spoken of since the election, but a 200% increase was super shocking.”

Alchemy is a boutique wine and beer bar located in the center of the Village of Hamburg. Cassell said 90% of the wine they sell is imported from Europe.

“A bottle that you would normally find here at Alchemy, which at least half of our bottles are $35, would now cost up to $90,” Cassell said.

Cassell explained these tariffs would not only impact the cost for customers, but hurt her business. She said Alchemy, which has been solely operated by women for almost seven years, could be on the brink of closure if prices skyrocket.

“This isn’t a game to us, this is our daily life,” Cassell said. “We put our blood, sweat, and tears into this every day.”

Alchemy also partners with several local organizations to host events and also caters private events such as birthday parties, graduations, and weddings. Cassell said several of those have already been booked and quoted, leaving her in a tough position as a business owner.

“You tell a customer your package costs $500, but now it’s 200% more,” said Cassell. “It’s kind of hard. You can’t give it away for free.”

Cassell and her business partner are going to focus on what’s available in other countries, including here in the United States. Alchemy already partners with local vineyards and even makes its own wine.

But Cassell fears there is not enough American wine to make up for all they usually offer.

“The reality of winemaking is it’s not like tomorrow we can just make more wine,” said Cassell. “You have to plant a vineyard, cultivate it. Wine takes a decade.”

Cassell said Hamburg has been incredible when it comes to supporting her business. Alchemy hosts numerous events throughout the year.

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Bay Area wine merchants brace for sharp increase in tariffs

The wine industry is bracing for a possible 200 percent tariff on wine, champagne, and spirits imported from Europe. It’s the latest in an ongoing trade war between the U.S. and its trading partners, in response to the European Union’s threat to put a 50 percent tax on American whiskey.

The European Union proposed the 50 percent tax on American whiskey to retaliate against President Trump’s tariffs on steel and aluminum that went into effect Wednesday. Now, the Bay Area wine industry, which is already playing catch-up from the pandemic, is caught in the middle.

Couples, friends, and colleagues capped off their workweek at San Francisco Wine Society Friday night with a glass of red or white. But how much they drink may soon depend on possible price increases linked to impending tariffs.

Danielle Kuzinich, owner of San Francisco Wine Society, said, “The argument of these tariffs is that, ‘Oh if European wines get too expensive, then people will just drink more California wines,’ but I think you’re going to see an increase on European wines and then you might end up seeing an increase on California wines as well because of the supply and demand.”

With hundreds of European labels in stock, Kuzinich said the trade war couldn’t have come at a worse time.

Kuzinich added, “In California, the two biggest retailers just laid off hundreds of people because people are drinking less as it is, and if these taxes come into play at a large number, it could shut down import companies.”

On busy Polk Street in San Francisco’s Russian Hill neighborhood, William Cross Wine Merchants and Wine Bar is also worried about how the new tariffs would affect prices.

Steven Sherman, owner of William Cross Wine Merchants and Wine Bar, said, “A Sancerre that was $20 would now be $60. People come in every day to buy their wine for dinner, so by doing that, it would really affect us greatly because then all of a sudden, the prices of everything are now almost triple.”

Sherman hopes they won’t have to pass on the price increase, but he said it all depends on how long the tariffs will be in place.

“Is it a short-time effect where we can get past it, or if it’s a long-time effect, I really don’t know what I would have to do,” said Sherman.

The California Wine Institute said in a statement, “The current dispute has never been about wine, and these tariffs will only hurt the broader wine sector, including farmers, vintners, distributors, retailers.”

“Fingers crossed that it’s a scare tactic, but who knows,” added Sherman.

The 200 percent tariff is expected to go into effect in April.

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