French wine and Champagne stocks fell sharply after U.S. President Donald Trump threatened 200% tariffs on imports. Shares of LVMH dropped over 4%, while other luxury and beverage firms with exposure to the sector also declined.

The tariff threat ties into Trump’s broader geopolitical strategy. He proposed a Board of Peace, chaired by himself for life, aiming to resolve global conflicts starting with Gaza. Countries that don’t join or pay a $1 billion fee face trade penalties.

European leaders have pushed back, calling the tariffs economic blackmail. France and Germany are urging the EU to activate tools against economic coercion. A coordinated European response could include $93 billion in retaliatory levies on U.S. goods.

Market watchers expect continued volatility in European luxury and beverage sectors. Any escalation in U.S.-EU trade tensions may pressure earnings and export-dependent firms ahead of spring selling seasons.