European Spirits Stocks Soar as U.S. Tariff Relief Talks Gain Momentum

The transatlantic trade war has taken a sudden turn, with U.S.-EU negotiations offering a lifeline to European spirits producers. Over the past week, shares of companies like Rémy Cointreau, Pernod Ricard, and Campari Group have surged as hopes rise for a tariff deal that could spare their premium wines, champagnes, and whiskeys from punitive U.S. duties. This sector-specific reprieve is now a critical catalyst for investors, though lingering risks in broader trade talks remind us that the champagne corks should stay sealed until the final terms are signed.

The Tariff Deal on the Table

The U.S. and EU have been locked in a protracted dispute over tariffs on steel, aluminum, and now spirits. In March 2025, President Trump threatened a 200% tariff on European wine and champagne, while the EU countered with a 50% tariff on American whiskey. By July, however, cooler heads prevailed. A framework agreement proposed a 10% baseline tariff on EU goods, with exemptions for “sensitive sectors” including aircraft, pharmaceuticals, and spirits. This carve-out, if finalized, would spare European brands from the worst of the U.S. duties, while the EU would suspend retaliatory tariffs on American whiskey.

The market reacted swiftly: on July 8, shares of European spirits makers jumped between 1.6% and 3.1% as the deadline for tariff hikes was pushed back to August 1. The gains were particularly pronounced for companies like Rémy Cointreau, which saw its stock rise 3.1%, and Campari, up 2.8%. Analysts at Equita highlighted that spirits producers stand to gain the most, with Rémy Cointreau positioned as the top beneficiary due to its reliance on high-end European exports.

Why Spirits Matter in This Deal

Spirits are a uniquely sensitive sector for both sides. For the EU, brands like Moët & Chandon (LVMH), Jack Daniel's (Brown-Forman), and Jameson (Pernod Ricard) are cultural icons and major revenue drivers. In the U.S., consumers—especially in high-income brackets—are increasingly drawn to European luxury goods. A 200% tariff would have priced many of these products out of reach, slashing profits for producers.

For the U.S., the exemption reflects strategic pragmatism. Spirits tariffs would hurt American consumers without significantly weakening European trade surpluses. By contrast, targeting sectors like automobiles or steel directly addresses trade imbalances. The 10% baseline rate, while not ideal, is a compromise that allows both sides to claim victory while avoiding a full-blown trade war.

Case Study: LVMH's Balancing Act

No company exemplifies this tension better than LVMH, whose Moët Hennessy division dominates premium spirits. Earlier this year, its shares fell 1.1% on tariff fears, extending a nine-day losing streak—the longest since 2021. LVMH CEO Bernard Arnault has been vocal in advocating for a resolution, warning that failure to reach a deal could force production shifts to the U.S., a costly and complex move.

Yet LVMH's luxury brand prestige offers some insulation. Even with tariffs, U.S. consumers may still splurge on a bottle of Moët for a wedding or corporate event. Still, the stock's recent underperformance—up only 0.5% year-to-date—suggests investors remain cautious until the deal is sealed.

Campari: Betting on Margin Resilience

Smaller players like Campari Group face tougher hurdles. The Italian firm projects a €90–100 million EBIT hit in 2025 due to existing tariffs and supply chain disruptions. Its shares have underperformed peers this year, down 8% as concerns over margin compression and rum supply constraints (e.g., Wild Turkey whiskey sales) weigh on sentiment.

Campari's strategy hinges on cost containment and pricing agility. CEO Simon Hunt has hinted that rivals' tariff-driven price hikes could allow Campari to gain market share by holding prices steady. Yet this gamble requires precise execution: overcorrection could backfire if demand softens.

The Risks Ahead

While spirits may be saved, broader trade tensions linger. The U.S. still seeks 25% tariffs on EU autos and 50% on steel, which remain unresolved. A failed deal on these sectors could reignite volatility, even if spirits are spared. Legal challenges also loom: U.S. courts are set to rule on “fentanyl-related” tariffs in July, which could complicate the EU's retaliatory measures.

Investment Takeaways

1. Buy the spirits sector now, but set limits: Companies with the strongest U.S. exposure and pricing power—Rémy Cointreau, Pernod Ricard, and Campari—are prime candidates. A deal by August 1 could trigger a year-end rally.
2. Avoid overpaying: Valuations are already rising, so wait for dips before committing.
3. Mind the broader trade war: Auto and steel stocks (e.g., BMW, ArcelorMittal) remain risky until those sectors are resolved.

In conclusion, European spirits stocks offer a rare bright spot in the trade war gloom. But investors should treat this as a tactical opportunity, not a buy-and-hold bet. The deal's details—and the EU's willingness to compromise on autos—will ultimately determine whether this tariff truce turns into a lasting peace.