The proud and historic French cognac industry, long seen as a symbol of luxury and refinement, is now reeling under the weight of international trade disputes and geopolitical tensions. Recent developments in global economics have shaken the very foundations of this iconic sector, particularly following the imposition of fresh U.S. tariffs and retaliatory actions between major global players. Once a thriving multi-billion-euro business, France's cognac producers are now facing uncertain futures and an alarming dip in global demand.

At the center of this turmoil is a newly announced 20% tariff by former U.S. President Donald Trump on all European goods. For French cognac, this is more than just a financial blow—it threatens access to its largest and most loyal market. The United States accounts for roughly half of global cognac consumption, making the American market vital to the industry's health. With these new barriers, cognac makers are preparing for steep declines in exports and revenues.

But the challenges don’t stop there. On the other side of the world, diplomatic friction between the European Union and China has also taken a toll. In response to EU tariffs on Chinese electric vehicles, Beijing has reportedly scaled back its imports of European luxury products, including cognac. The result? A staggering 50% drop in cognac exports to China—one of the industry’s fastest-growing markets in recent years.

Producers on the ground are feeling the pain firsthand. In the heart of the Cognac region, winemakers like Christophe Fillioux are taking desperate measures. Fillioux has already uprooted half a hectare of old vines, with plans to remove another hectare and a half next year. This isn’t just a symbolic act—it’s a strategic retreat in response to shrinking demand and oversupply. For many vintners, cutting back production is the only way to survive the storm.

The crisis is the result of multiple factors converging. During the COVID-19 pandemic, cognac producers ramped up production to meet a boom in luxury consumption. But post-pandemic inflation, shifts in consumer spending, and now political conflicts have left them with excess stock and no one to sell it to. The industry has slashed its authorized production limits to half of what it was in 2022 in an effort to stabilize prices and supply.

Big brands like Hennessy, Rémy Martin, and Martell are not immune. These global names have begun reducing their orders from local growers and may soon be forced to make even tougher decisions, including layoffs and scaling back operations. For small family-run distilleries, like that of Pascale Dupuy, the future is especially grim. Years of heritage and tradition are now at risk of being wiped out by forces far beyond their control.

In an attempt to offset losses in the West, producers are turning to new markets across Asia and Africa. But expanding into unfamiliar territories takes time, investment, and a stable global image—none of which are easy to achieve in the current climate. The industry’s trade body, BNIC, has called for diplomatic intervention and has urged the U.S. and EU to exempt wine and spirits from any further tariff battles.

Florent Morillon, president of the BNIC, has voiced concern over the weaponization of alcohol in political disputes. “We are not responsible for the underlying causes of these tensions, but we are paying the price,” he warned, calling for a de-escalation before the damage becomes irreversible.

As the scent of aged oak barrels and the gleam of copper stills fade into economic distress, the French cognac industry faces its most sobering chapter yet. Once a story of celebration, its future now hangs in the balance—caught between trade wars and tumbling global demand. Whether it can weather this storm remains to be seen, but one thing is clear: the world’s finest spirit is now a casualty in a conflict it never asked to be part of.