Cognac Industry Squeezed as Transatlantic and Asian Trade Tensions Take Their Toll
France’s storied Cognac-producing region is facing one of its most difficult periods in recent memory, as the brandy industry finds itself caught between two of the world’s most consequential trade disputes — one with China and one with the United States — leaving producers with dwindling export revenues and an uncertain path forward.
The Cognac appellation, centred on the Charente department in southwestern France, is almost entirely dependent on overseas markets, with the vast majority of its output destined for export. That structural vulnerability has been brutally exposed as diplomatic and commercial tensions between the European Union and its two largest trading partners have escalated, depressing demand in key markets simultaneously.
Relations with Beijing deteriorated sharply after the EU imposed provisional tariffs on Chinese electric vehicles last year, prompting China to launch its own investigation into European brandy imports — a move widely seen as a retaliatory measure targeting one of France’s most emblematic agricultural exports. The investigation has cast a long shadow over sales to China, which had in recent years become one of Cognac’s most dynamic and lucrative markets.
A Sector Under Pressure on Two Fronts
At the same time, the prospect of renewed or expanded American tariffs under the current US administration has added a further layer of anxiety. The United States has historically been the single largest market for Cognac, and any significant increase in import duties would compound the damage already being felt from the Chinese slowdown. According to reports, producers and regional officials have been lobbying Brussels to prioritise the sector’s interests in ongoing trade negotiations with Washington.
The knock-on effects are being felt throughout the supply chain. Grape growers in the Charente, whose livelihoods are closely tied to the fortunes of the major Cognac houses, are reported to be among the most exposed, with some calling for direct EU agricultural support to help them weather the downturn. The region’s economy is closely intertwined with the Cognac trade, making the current difficulties a matter of broader regional concern rather than simply an industry-level problem.
Industry representatives have reportedly urged European authorities to pursue negotiations with both Beijing and Washington with greater urgency, arguing that the Cognac sector — along with other geographically protected European food and drink products — should not become a bargaining chip in disputes whose origins lie elsewhere. The use of agricultural exports as leverage in broader industrial policy disputes is a longstanding source of frustration for European producers of premium goods.
The situation illustrates a wider dilemma facing European policymakers: how to defend strategic industries such as electric vehicles and semiconductors without triggering retaliation that falls disproportionately on unrelated sectors. Cognac, like Champagne or Scotch whisky, carries significant cultural and economic weight far beyond its size, making it a politically sensitive target. Officials in Paris and Brussels are understood to be monitoring the situation closely, though concrete measures to shield producers from the full impact of these twin pressures have yet to materialise. For the growers and distillers of Charente, the waiting is proving costly.
