Global spirits leader Diageo has proposed that the U.S. government tighten rules of origin requirements in trade agreements as an alternative to imposing tariffs, according to a letter sent to the U.S. Trade Representative.
Dated March 11, the letter highlights Diageo’s stance amid former President Donald Trump’s efforts to restructure global trade policies. The company argues that revising rules of origin could align with the administration’s objectives while benefiting the industry.
The proposed rules would prioritize goods—such as alcoholic beverages—wherein the ingredients and components are primarily sourced from the U.S. or its key trading partners. Alden Schacher, Vice President of Government Relations at Diageo North America, emphasized that this approach would bolster domestic supply chains, prevent foreign competitors from bypassing tariffs through trade partners, and reinforce economic growth in the U.S.
Diageo’s recommendation includes mandating that the grains or plants used in imported alcoholic beverages originate from the United States or a nation with a trade agreement, such as Canada or Mexico. Additionally, the company suggests that distillation and barrel aging should also take place within the U.S. or its strategic trade partners.
With billions of dollars in U.S. sales of tequila and Canadian whisky, Diageo has raised concerns over the potential financial impact of proposed tariffs. Company executives estimate that a 25% tariff on imports from Canada and Mexico could cost the firm around $200 million in operating profit for the latter half of the fiscal year.
Adding to these concerns, Trump recently announced a potential 200% tariff on European alcohol imports, including wine and cognac.
Schacher’s letter also underscores the reciprocal nature of the distilled spirits trade, arguing that measures to correct imbalances are unnecessary. He further highlighted Diageo’s significant contributions to the U.S. economy, noting that the company employs thousands of American workers, operates 11 manufacturing sites, and invests $650 million annually in domestic inputs such as barrels, glass, and cans.
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