Shares in Guinness maker Diageo (DEO) staggered lower today as it was revealed that wine and spirits are not included in the U.S./EU trade deal.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
EU Trade Commissioner Maros Sefcovic said today that the deal reached last month does not include wine and spirits.
Clear Commitment
That deal includes a 15% U.S. tariff on most imports from the bloc, including autos, pharmaceuticals, semiconductors and lumber.
“This one – wines and spirits – we didn’t get in. But I can tell you that there is clear commitment from the European Commission to put it on the table”, Sefcovic said.
The Distilled Spirits Council of the United States said it was disappointed by the revelation. “ Without a permanent return to zero-for-zero tariffs on spirits, American distillers do not have the certainty to plan for future export and job growth without the fear of retaliatory tariffs returning”, it said.
It added that it was “determined to continue engaging with the Trump administration to urge for additional negotiations”.
Tariff Headache
The uncertainty over what the exact tariff rate on wines and spirits will be adds to the now year-long tariff turmoil suffered by Diageo, whose other brands include Johnnie Walker whisky and other drinks groups such as Constellation Brands (STZ) whose brands include Italy’s Ruffino label.
As can be seen below, the performance of both stocks has been hit this year.
Trump earlier this year threatened to put a huge 200% tariff on wine, champagne and other alcohol products coming out of the EU. Other rates bandied around include 30% and 50%.
Diageo has already revealed that it expects to take a $150 million annualized hit on tariffs on U.K. and European imports into the U.S. That was based on a 10% tariff regime, so it has the potential to be much higher unless glasses can be clinked on an enhanced trade deal.
What are the Best Beer and Beverage Stocks to Buy Now?
We have rounded up the best beer and beverage stocks to buy using our TipRanks comparison tool.
