Diageo has asked the US government to consider changes to rules of origin requirements as an alternative to imposing tariffs.
The Bulleit Bourbon maker, which has warned US levies on Canada and Mexico could hit profits, said changes to the rules could support President Trump’s trade aims without resorting to tariffs.
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In a letter to the Office of the US Trade Representative, Diageo executive Alden Schacher said “enhanced” rules of origin would “deepen US supply chains, disincentivise the use of non-originating content” and help the US government in its to aim of “growing US jobs, the US economy and resilient supply chains”.
Schacher said changes to origin rules could mean “substantially all of the grains or plants” used as inputs in imported alcoholic drinks “be wholly originating in the United States or the territory of a strategic trade partner”. Such a partner could include “any country which has a trade agreement with the United States”, Schacher added.
Diageo has also suggested ensuring distillation must occur in the US or a trade partner. Any barrels used for ageing would come from in the US or its trade partners, the company said.
“Implementation and enforcement of such enhanced rules of origin would preserve existing reciprocity in trade in alcoholic beverages and distilled spirits and elevate and prioritise trade with US strategic partners,” Schacher wrote.
“Notably, such enhanced rules of origin also are consistent with the administration’s recent ‘pause’ on tariffs on imports from Canada and Mexico pursuant to the International Emergency Economic Powers Act, which respect integrated North American supply chains that utilise substantial US content.”
Last Friday, Trump paused the planned tariffs on certain goods entering the US from Canada and Mexico.
The US President suspended tariffs on goods covered under the three countries’ USMCA trade deal.
Three days earlier, Washington had imposed its planned 25% tariff on imports from Canada and Mexico, lined up by Trump upon taking office, when he cited concerns over immigration and the imports of fentanyl into the US.
Trump had already paused the plans once after talks with Canadian Prime Minister Justin Trudeau and Mexico President Claudia Sheinbaum, though he said the suspension would elapse on 4 March.
The fresh suspension lasts until 2 April. In response, Canada “will not proceed” with the second tranche of tariffs it had lined up, Finance Minister Dominic LeBlanc said on X.
A 25% US tariff still applies on goods that do not meet rules-of-origin criteria in the USMCA deal.
Last month, Diageo CFO Nik Jhangiani said the impact of US tariffs on Canada and Mexico could hit the Don Julio Tequila maker’s operating profits by $200m.
Earlier this week, major US food and beverage manufacturers asked the Trump administration for “targeted” tariff exemptions on imported ingredients.
In a letter to the White House, US trade body Consumer Brands Association requested the “targeted and carefully calibrated removal” of a selection of ingredients and inputs from US tariff measures.
On Wednesday, the EU announced US food and drink imports would be among products hit with tariffs as it responds to Washington’s decision to tax steel and aluminium shipments.
US food items including meat, seafood, dairy and confectionery will be hit by the newly-announced levy on €26bn ($28.4bn) worth of American goods.
The EU is also targeting drinks including beer, wine, gin, whiskey, rum, Tequila and non-alcoholic drinks derived from milk.
Brussels plans to introduce the tariffs in two steps, starting on 1 April and fully in place from 13 April.
Yesterday, Trump took to social media to warn the EU he would impose a 200% tariff on the bloc’s alcohol imports to the US.
An official at The European Commission told Just Drinks today (14 March) there is a call planned this afternoon between US Commerce Secretary Howard Lutnick, the country’s Trade Representative Jamieson Greer and Maroš Šefčovič, the EU’s Commissioner for Trade and Economic Security.
