Diageo urges US to modify rules of origin instead of imposing tariffs on alcohol imports 

UK – Diageo has urged the US government to reconsider its approach to trade regulations, advocating for changes to rules of origin requirements rather than imposing tariffs on imports from Canada and Mexico.  

The Johnnie Walker whisky maker warned that US tariffs on these key trading partners could significantly impact its profitability. 

In a letter to the Office of the US Trade Representative, Diageo executive Alden Schacher proposed “enhanced” rules of origin as a strategic alternative to tariffs. Schacher argued that such changes would help deepen US supply chains, reduce reliance on non-originating content, and support the administration’s broader trade objectives.  

These adjustments, he added, would align with the government’s priorities of fostering job creation, strengthening the US economy, and ensuring more resilient supply chains. 

Under Diageo’s proposed framework, alcoholic beverages imported into the US would need to contain “substantially all” of their raw materials—such as grains or plants—sourced from the United States or a designated trade partner. Such a partner would include any country that has an existing trade agreement with the US.  

The company also suggested that distillation should occur within the US or an allied trade partner, while barrels used for aging spirits should originate from these regions as well. 

Schacher emphasized that implementing and enforcing these stricter rules of origin would not only preserve reciprocal trade in alcoholic beverages but also prioritize economic cooperation with US strategic partners.  

He further highlighted that these recommendations align with President Donald Trump’s recent decision to “pause” tariffs on imports from Canada and Mexico, which reflects the administration’s recognition of the deeply integrated North American supply chain. 

President Trump had initially announced a 25% tariff on Canadian and Mexican imports, citing concerns over immigration and fentanyl smuggling.  

However, following discussions with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, he temporarily suspended the tariffs until March 4.  

The administration has since extended the suspension until April 2. In response, Canada has opted not to proceed with its own retaliatory tariffs. 

Despite the pause, a 25% US tariff remains in place for goods failing to meet the rules-of-origin requirements outlined in the United States-Mexico-Canada Agreement (USMCA).  

Last month, Diageo CFO Nik Jhangiani estimated that these tariffs could cut the company’s operating profits by as much as $200 million. 

Tensions have further escalated on the global stage, with the European Union announcing new tariffs on US food and drink imports in retaliation for Washington’s levies on steel and aluminum shipments. 

Starting April 1, the EU will impose duties on €26 billion (US$28.4 billion) worth of American goods, including meat, seafood, dairy, confectionery, beer, wine, gin, whiskey, rum, tequila, and non-alcoholic dairy-based drinks. 

On March 13, President Trump responded to the EU’s actions with a social media post warning that he would introduce a 200% tariff on European alcohol imports into the US. 

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