Drink company that sells Guinness and Johnnie Walker sees $150M profit hit from tariffs

The world's biggest spirits maker, Diageo, said on Monday that the impact of President Trump's tariffs is expected to be $150 million "on an annualized basis."

A 10% tariff on United Kingdom and European imports into the U.S. is the causing factor, the company said in a fiscal third quarter trading statement.

"In the third quarter we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25," Diageo CEO Debra Crew said in a statement. 

"We also reiterated our organic operating profit outlook for fiscal 25, including the impact of tariffs based on what we know at this time," she continued. 

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Back in February, Diageo estimated its annualized hit from the duties would be roughly $200 million, after threats of a 25% levy affecting Mexican tequila and Canadian whisky did not materialize.

Diageo plans to save $500 million in costs by 2028 following years of sales declines and revised down its expected hit from U.S. tariffs as the threat of levies on Mexico and Canada receded.

The plan will help the maker of Johnnie Walker whisky and Guinness beer deliver about $3 billion in free cash flow per year from fiscal 2026 and reduce debt, Crew said in the statement.

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Diageo generates around 45% of sales in the United States from products that must be made in either Mexico or Canada.

The spirits industry was already struggling with a sharp drop in sales amid high interest rates and inflation when President Donald Trump announced sweeping tariff plans that threatened to upend sales further.

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Reuters contributed to this report.