Champagne region on ice over potential U.S. tariff impact

The miles of cellars underneath France's so-called champagne capital, Epernay, are stocked with hundreds of millions of bottles of the famous sparkling wine.

Jean-Manuel Jacquinot's family has been in the champagne business since the 1800s.

But the uncertainty in the market at the moment is not something he has seen before.

"I think the Champagne region is having a small crisis nowadays," he says.

'Everybody is surprized'

We meet Jean-Manuel and he leads us down to his cellar to see his stock.

The decision by the United States to impose, and then pause, tariffs has rocked global trade - including France's wine export business.

"It's a big shock because the U.S. market is the first market for champagne in the export business," says Jean-Manuel.

The French finance minister says there will be "temporary" turbulence with the United States as a result of the tariffs imposed by Washington.

The U.S. government has temporarily suspended reciprocal import taxes for three months, but uncertainties still remain.

"Everybody is surprized," says Jean-Manuel. "And you have some wineries which are working mainly only with the United States, so for them it will be a very difficult time."

Even without the 20 per cent reciprocal taxes, there is still a baseline tariff of 10 per cent in place on almost all foreign imports to the U.S.

Spring brings a fresh start - and tariff concerns

The grapes for champagne are grown across this region.

Fields of chardonnay, pinot noir and meunier roll out before us, with vines planted in the soft ground of chalk and clay.

In April, the French finance ministry outlined the possible impacts of the American tariffs on the retail sector.

It included a loss of export competitiveness for certain brands, plus an inflationary effect, and excess supply on the French market.

If the tariffs are reinstated, industry groups expect sales of French wines and spirits to the U.S. to drop at least 20 per cent.

It would be a major blow to the famous sparkling wine sector.

Last year, almost 30 million bottles of champagne were exported from France to the United States, worth more than $900 million.

U.S. President Donald Trump says companies can avoid the import taxes if they manufacture their products in the U.S.

But champagne is named after the region where it's grown and bottled. It cannot be made anywhere else.

If Europe moves ahead with its own retaliatory tariffs on American whisky, Trump has threatened to impose a 200 per cent rate on "all wines, champagnes and alcoholic products coming out of France and other EU represented countries."

Europe's industry body said it would welcome a negotiated solution with the U.S.

In a statement, spiritsEUROPE said: "Our sectors are highly integrated across the Atlantic and our shared trade in spirits supports many jobs on both sides.

"We want to ensure a return to an environment that supports continued growth for both EU and U.S. producers."

Prior instability in the wine industry

Champagne-making is an age-old tradition. It's a crucial part of France's food and drink heritage.

But wine production and consumption was falling in France, even before the U.S. tariffs were announced.

Jean-Manuel has noticed the trend.

"There is no question the young generation are switching to beers, they are switching to prosecco, they are switching to easy-drinking beverages," he says, as we walk through a vineyard above the town of Epernay.

Champagne is traditionally drunk at moments of celebration but the current commercial climate, and the outstanding issues facing the sector, mean the future is uncertain for France's most famous drink.