The cost of a pint of Guinness is set to rise (Image: Getty)
British drinks powerhouse Diageo has revealed it is bracing for a £111million hit from US tariffs, despite the UK government having secured a trade deal with former US President Donald Trump.
The FTSE 100 firm, behind household names like Guinness, Smirnoff, and Johnnie Walker, told The Sun it will be impacted by a ten per cent baseline tariff on imports — a blow to one of Britain’s leading exporters.
Chief executive Debra Crew confirmed the company will look to absorb the higher costs through various measures, including price hikes in the US, which could soon leave American drinkers paying more for their favourite tipples.
She said: “We still have no plans to offload Guinness.”
Diageo’s flagship export Johnnie Walker — classified as Scotch and therefore not eligible to be produced outside the UK — is set to take the brunt of the new charges. The whisky giant recently launched a promotional campaign in partnership with Netflix’s hit series Squid Game, featuring limited edition bottles.
The revelation adds fuel to growing criticism that Keir Starmer’s trade arrangements, while benefiting industries such as automotive manufacturing, may be sidelining major exporters in other sectors.
However, there has been some relief for the drinks firm. Fears over a 25 per cent tariff on Mexican spirits have not materialised — good news for Diageo’s other brands, including Don Julio tequila and Crown Royal whisky.
Ms Crew struck a more optimistic note over the UK’s recent trade deal with India, describing it as a major breakthrough. The agreement opens access to the world’s largest whisky market, with Diageo also launching Godawan, a single malt whisky crafted in Rajasthan, India.
In a strategy to boost its financial outlook, Diageo has outlined plans to generate £373million in cost savings and is considering offloading a number of brands.
Chief financial officer Nik Jhangiani suggested these would be more significant than previous moves: “The dismissals would be above and beyond the small disposals seen in recent years.”
Despite speculation, Guinness remains firmly on Diageo’s books. Analysts say it remains central to the group’s strategy.
Richard Hunter, from Interactive Investor, said: “Guinness accounts for two-thirds of Diageo’s beer sales and it appears this jewel in the crown is one Diageo is keen to protect.”
Rachel Reeves issued damning high street warning over VAT blunder
Four trade bodies have written to Rachel Reeves (Image: Getty)
Four major trade bodies have written a joint letter to the Chancellor urging her to reinstate tax-free shopping for tourists amid decreasing US sales and continued struggles on British high streets. The groups, representing retailers, fashion giants, beauty brands and luxury businesses, reportedly warned Donald Trump’s tariffs could cause long-term damage to British competitiveness.
“US tariffs will negatively impact our businesses’ profitability,” the British Retail Consortium, the British Beauty Council, Walpole and the British Fashion Council wrote in a joint letter, seen by The Times, to Rachel Reeves. “We are considering how we, as associations, and the UK government could best support businesses at this time.” They warned disruption caused by the White House’s controversial policy, which has caused economic turbulence worldwide, is leading some UK firms to cancel orders or withdraw from the US market, while others are facing demands from American buyers to cut pressures.
The trade bodies warned of the impact of Donald Trump’s tariffs (Image: Getty)
The Times reports the groups urged the Government to reintroduce tax-free shopping for tourists to help cope with falling US sales and improve the UK’s appeal as a global shopping destination.
They said American shoppers are more likely to travel to fashion hubs like Paris and Milan, rather than the UK, where a tax rebate scheme is in place.
In the letter, the bodies argued the policy is “not a luxury” but a “proven growth strategy”.
The policy, which allowed tourists to get back 20% VAT on UK transactions, was scrapped in 2021 by the Conservatives.
Affluent tourists spend 14 times more than the average visitors, according to data from consulting firm Bain & Company, with shopping one of the biggest outlays.
Visit Britain has forecast that inbound spending by tourists in 2024 would stay almost 10% below pre-pandemic levels, The Times reported.
A Treasury spokesman told the newspaper: “We have no plans to introduce a new tax-free shopping scheme in Great Britain. Visitors can continue to claim VAT relief where the items purchased are shipped directly to their home country as exports.”
