The risks of trade tariffs for US jobs and the global drinks industry

London-based drinks giant Diageo, the producer behind iconic brands such as Johnnie Walker whisky, Guinness, and Tanqueray gin, has issued a stark warning over the potential economic fallout of proposed US import tariffs. The company has highlighted that such protectionist measures could jeopardise thousands of American jobs while exerting significant strain on global trade in the wider drinks industry.

In a letter to White House representatives, Diageo urged the US administration to adopt a more nuanced approach. The company emphasised that free trade not only drives economic growth but also underpins employment across the drinks production, sales, and distribution sectors. According to Diageo, the firm’s operations support over 178,000 American jobs, including 11,500 directly employed by the company across production, sales, and distribution roles.

The US government was reminded of the wider economic contributions made by Diageo, which generates an estimated $1.5 billion in alcohol excise duties for federal coffers. The drinks producer also argued that there is no justified need for harsh protectionism, citing that trade in spirits between the US and its trade partners is largely reciprocal and fair.

Diageo’s representative for North America, Alden Schacher, proposed implementing stricter “rules of origin” requirements as an alternative to the tariffs. This approach, the company argued, would favour goods where ingredients are predominantly sourced from the US or its trade allies while addressing loopholes that allow foreign competitors to sidestep trade regulations through intermediary markets like Mexico or Canada.

The company’s intervention comes amidst heightened tensions in global trade policy, as the US threatens a 200 per cent tariff on EU drinks imports, including wine, champagne, and cognac. The EU, in turn, has announced countermeasures worth €26 billion. This escalation mirrors previous trade disputes that research suggests were largely ineffective in meeting their objectives. According to analysis from DHL and the Asian Development Bank, earlier US tariffs on Chinese imports only marginally reduced direct trade volumes and, when factoring in indirect imports, Chinese market share into the US actually increased.

Diageo’s concerns reflect the broader challenges posed by protectionism, particularly for multinational corporations operating in highly interconnected markets. The company’s call for policy based on cooperative trade principles highlights the stakes at play for jobs, industry growth, and economic stability.