Diageo, the largest spirits company globally, announced on Monday that the financial repercussions of President Trump’s tariffs are projected to reach approximately $150 million annually.
The imposition of a 10% tariff on imports from the United Kingdom and Europe entering the U.S. was identified as the primary reason for this forecast in the company’s trading statement for its fiscal third quarter.
In her remarks, Diageo CEO Debra Crew highlighted, “During the third quarter, we achieved significant organic net sales growth and remain committed to our expectations of consistent improvement in organic net sales performance during the latter half of fiscal 2025.”
TOYOTA SEES $1.3B PROFIT HIT FROM TRUMP TARIFFS IN 2 MONTHS
Earlier, in February, Diageo had estimated that its annual exposure to these tariffs would be around $200 million, particularly after facing threats of a 25% tax that could impact Mexican tequila and Canadian whisky, which ultimately did not come to fruition.
As part of its strategy to cope with declining sales over the years, Diageo plans to implement measures to save $500 million in costs by 2028. This revision of tariff impact has allowed the company to reduce its originally projected financial hit stemming from duties imposed by the U.S.
The initiative aims to enable the producer of renowned brands such as Johnnie Walker and Guinness to generate approximately $3 billion in free cash flow annually by fiscal 2026 while also helping to mitigate its debt levels, Crew stated.
US CONSUMER SENTIMENT DROPS TO NEAR RECORD LOW IN MAY ON INFLATION WORRIES, TARIFF UNCERTAINTY
Diageo reports that about 45% of its sales in the United States come from products manufactured in either Mexico or Canada.
The spirits sector was already facing challenges due to a sharp decline in sales attributed to elevated interest rates and inflation prior to President Trump’s tariff announcements, which threatened to further disrupt the market.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DEO | DIAGEO PLC | 115.05 | +0.26 | +0.23% |
CLICK HERE TO READ MORE ON Finance Newso BUSINESS
Reuters contributed to this report.
