Where EU tariffs will hit hardest

The recent data on tariffs and consumer decision-making is clear: raise prices on a product due to higher import taxes, and consumers will turn to a cheaper alternative.

That doesn’t bode well for certain U.S. products, and the states where they are produced, as the U.S. and EU engage in tit-for-tat tariff threats. Think California almonds, Tennessee whiskey, and rearview mirrors from Michigan.

From 2017-2019, Tennessee whiskey exports to the European Union dropped from $362 million to $220 million amid President Donald Trump’s first term trade war, and exports remained low until the retaliatory tariffs were suspended, according to a recent research report from Trade Partnership Worldwide. The 2018 Trump tariffs were suspended by the Biden administration in January 2022.

“Once the EU lifted the tariffs, Tennessee’s whiskey exports increased 42% in the year after,” said Daniel Anthony, president of Trade Partnership Worldwide. “But Tennessee exporters know how retaliation could again reduce sales.”

On Thursday, Trump threatened 200% tariffs on EU wine and alcohol, and said he “is not going to bend at all” when it comes to U.S. tariffs levied on other nations’ imports. His Treasury Secretary, Scott Bessent, told CNBC he doesn’t understand why the markets would make a big deal out of this threat, but for some U.S. states, the EU is a big market.

Unlike the tariffs imposed by the Trump administration, where U.S. shippers have to pay the tariffs in order to receive their products, reciprocal tariffs would be imposed on U.S. exports which are paid by EU importers. The higher prices could either drive down demand or shut down a market.

“There is an expectation companies will lose sales as EU consumers shift to less expensive options,” Anthony said.

Data compiled by Trade Partnership Worldwide shows that the value of U.S. exports that could be subject to tariffs would increase five-fold, from $6 billion (based on the original Trump tariffs) to over $27 billion.

“This is a major tariff expansion on previous exports,” Anthony said. 

EU retaliatory tariffs are set in two tranches — the products hit last time that are being reupped on April 1, and then the expansion of additional products, subject to further discussion, which could be enacted in mid-April.

On a percentage basis, new analysis on the EU retaliatory tariffs shows New York and North Dakota companies potentially having the highest share of exports in the retaliation crosshairs, which can impact demand on their goods: New York (39%), North Dakota (36%), Nebraska (32%), Iowa (26%), and West Virginia (26%).

On an absolute dollar basis, some of the states on the East and Gulf Coasts with major ports are among the top states facing new EU tariffs, including New Jersey, Georgia, North and South Carolina, Virginia, and Texas. Products from these states range widely, from casks for alcohol brewing to tobacco and tobacco products, peanuts, frozen and fresh orange juice, food oils, motorcycles, dishwashers, clothing, footwear, furniture, and carpets.

But Anthony said it is the California almonds, Tennessee whiskey, and rearview mirrors from Michigan that stand as some of the best examples of acute risk and market need — “the EU is the biggest buyer of these products and retaliatory tariffs will hurt much more.”

Brandon Daniels, CEO of corporate risk management consultant Exiger, said the retaliatory EU tariffs place American whiskey producers at a substantial competitive disadvantage.

“States like Tennessee and Kentucky, whose economies depend significantly on this luxury export, would feel acute economic pressure. This is where politics and trade policy collide at the moment,” said Daniels.

Companies in Tennessee exported $575 million in whiskies to the EU in 2024 (66% of its exports to the world). 

In 2024, California exported $1.2 billion in shelled almonds to the EU. The European Union represents 37% of California’s exports to the world.

Out of Michigan, companies exported $519 million in rear-view mirrors to the EU in 2024 (48% of its exports to the world).

In the auto sector, companies have more room to negotiate.

“In previous tariff conflicts, we’ve seen that U.S. exporters of critical automotive components — such as precision electronics from Michigan — often partially absorb retaliatory tariff costs,” Daniels said. “While essential components will continue to flow, American producers typically share tariff pain with their European buyers, as neither side can afford to bear the full cost alone. This shared burden highlights how interconnected the automotive supply chain truly is.”

Red states beyond the whiskey states will feel the pain

In the world of manufacturing, molybdenum, which is used in the production of steel, lubricants, pigments, and as a catalyst in the petroleum industry, is a large export for Arizona to the EU. In 2024, Arizona exported $304 million in molybdenum to the EU (89% of its exports to the world).

South Carolina exported $223 million in the flexible polymer ethylene copolymers to the EU in 2024 (59% of its exports to the world). This chemical is used in packaging, hot-melt adhesives, automotive components, and construction materials, because of its durability, flexibility, and adhesive properties.  

Several other plastic resins also topped the list for South Carolina, and West Virginia, where companies exported $146 million in plastic resins to the EU in 2024 (59% of its exports to the world).

In some areas, the current U.S. trade imbalance will influence negotiating.

With a record goods trade deficit of nearly $236 billion in 2024, the U.S. relies on Europe for high-value manufactured goods like vehicles, pharmaceuticals, and industrial equipment. But these are sectors where U.S. negotiators have meaningful leverage through targeted tariffs, Daniels said. 

European automakers exported roughly $54 billion worth of vehicles to the U.S. in 2022, dwarfing American automotive exports to the EU. A targeted U.S. tariff in this sector would place significant pressure on European manufacturers — particularly Germany, whose auto industry alone comprises over 30% of Europe’s total exports to the U.S., he said.

According to customs data tallied by Exiger, pharmaceuticals represent Europe’s largest export category to the U.S., at nearly $92 billion annually.

“While targeting pharmaceuticals through tariffs might be politically delicate, it would directly impact European pharmaceutical giants, creating strong incentives for Brussels to negotiate. Although the 200% increase on wine and liquor that Trump announced could hurt, it’s not going to rebalance trade,” Daniels said.