Cognac producers face a squeeze from both China and the United States
Usagevpn.com – The grape harvest is ending in southwestern France with Cognac producers confronting a market crisis that reaches far beyond the Charente River. The region’s famous amber spirit is made only in this area, yet its fortunes depend overwhelmingly on buyers abroad. With China and the United States both becoming harder markets to serve, growers and major houses are dealing with sharply reduced sales, cancelled orders and uncertainty over tariffs.
Cognac has deep links to Europe’s political history. Jean Monnet, widely seen as one of the architects of European integration, was born into a Cognac-producing family and worked in its business. Three centuries after the drink first developed its international reputation, the industry is now feeling the consequences of trade disputes in which it has little direct involvement.
About 98% of Cognac production is sold outside the European Union. That dependence makes the sector especially vulnerable when access to key export destinations changes. Sales have dropped from 230 million bottles in 2023 to 140 million bottles, placing pressure on vineyards, merchants and the four dominant houses: Rémy Martin, Hennessy, Martell and Courvoisier.
A smaller harvest eases excess supply
Weather has compounded the industry’s difficulties, although drought has also reduced the risk of a larger surplus. In Gondeville, winegrower Matthieu Augier said an initially encouraging season was weakened by dry conditions.
“We thought the harvest was going to be promising, but in the end the drought took its toll. Compared with a typical year, we’re looking at a 30 to 40% reduction in the harvest in economic terms. You could say in a way that nature helps regulate our surpluses.”
For growers, the smaller crop is not a solution to the underlying problem. It simply brings output nearer to a level of demand that has fallen dramatically. The major Cognac houses have already reduced purchases from regional winegrowers after customers cancelled contracts.
China became a target in the electric-vehicle dispute
China is Cognac’s second-largest destination after the US and accounts for roughly one-quarter of exports. The disruption there began with the broader EU-China conflict over electric vehicles. France was among the strongest supporters of EU action over concerns that Chinese carmakers benefited from state support that put European manufacturers at a disadvantage.
After Brussels imposed duties of as much as 35.3% on Chinese electric vehicles, Beijing responded by focusing on European brandy. In 2024, China introduced provisional duties reaching 34.8%. It later confirmed the measures, while allowing leading Cognac producers to avoid them if they agreed to sell at undisclosed minimum prices.
Industry representatives say the commercial damage had already spread before those exemptions could provide much relief. Raphaël Delpech, director of the National Interprofessional Cognac Bureau, described the sector as an unintended casualty of a dispute centred on another product.
“We have been collateral damage in the trade war which started in 2023 between Brussels and Beijing over Chinese electric vehicles, a symbolic product for the EU market.”
He said the political association affected consumer behaviour and retail decisions in China.
“Once the Chinese government singled us out and associated us with an anti-Chinese European and French policy, consumers started to distance themselves. The distributors stopped buying our bottles and stopped putting our products on their shelves.”
US tariff uncertainty adds a second major challenge
The United States is even more important to Cognac, taking around half of all exports. French Cognac had previously faced US tariffs during Donald Trump’s first presidency, when the long-running Boeing-Airbus dispute brought duties on a range of European products. Those tariffs were subsequently suspended during Joe Biden’s administration.
Trade tensions returned after Trump imposed broad tariffs on US trading partners in April 2025. An agreement reached by the EU and the US in Turnberry, Scotland, in July established a 15% tariff for most European goods entering the American market, including Cognac.
Wine and spirits companies have pressed for an exemption, arguing that the tariff is damaging an industry already struggling with reduced demand. Inflation has also raised prices for consumers in the US, while repeated threats of substantially higher tariffs on French wines and spirits have made the market less predictable for importers.
“It created an extremely anxiety-inducing environment for all our importers in the US, who, just as in China, eventually came to the conclusion that it was better to bet on something safer than Cognac.”
In July 2026, EU lawmakers agreed to eliminate the remaining EU duties on US goods covered by the Turnberry arrangement. Washington then agreed to resume talks on possible exemptions from the 15% US tariff. For Cognac, however, the negotiations have not yet produced a visible breakthrough.
French MEP Eric Sargiacomo, deputy chair of the European Parliament’s intergroup on wines and spirits, said progress appeared limited.
“I get the impression that not much is moving forward. The only ones who have managed to make clear progress on this issue are the British.”
The United Kingdom obtained the removal of US tariffs on whisky in May, and Irish whiskey received comparable treatment in mid-September. Cognac remains subject to the 15% charge, leaving producers in Charente caught between declining orders, a smaller harvest and trade policies shaped far beyond their vineyards.
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