Guinness owner Diageo has ditched its medium-term guidance as it warned US tariff measures could stymie a recovery in demand. The drinks giant, which also owns Smirnoff vodka and Gordon's gin, warned that any tariffs would most impact US sales of its tequila and Canadian whisky products. President Donald Trump unveiled plans over the weekend to impose a 25 per cent tax on imports from Mexico and Canada and a 10 per cent tariff on Chinese-made goods.

The Canadian and Mexican governments announced retaliatory measures, with the former declaring tariffs on American alcohol. Trump has since suspended levying tariffs on Mexico and Canada for 30 days while negotiations take place on trade, border security and immigration issues. Before considering the fiscal impact of the tariffs, Diageo had expected a 'sequential improvement' in organic net sales growth and a 'slight decline' in organic operating profit during the second half of the 2025 financial year.

New levies: President Donald Trump unveiled plans over the weekend to impose a 25 per cent tax on imports from Mexico and Canada and a 10 per cent tariff on Chinese-made goods. Debra Crew, chief executive of Diageo, said the tariffs bring 'further complexity in our ability to provide updated forward guidance given this is a new and dynamic situation. 'We are taking a number of actions to mitigate the impact and disruption to our business that tariffs may cause, and we will also continue to engage with the US administration on the broader impact that this will have on everyone.'.

Consequently, Diageo has now suspended its medium-term guidance for organic net sales growth of 5 to 7 per cent due to current political and economic uncertainty. The FTSE 100 firm made the announcement alongside results showing its organic net revenues rebounded in the first half of the year. Turnover tipped up by 1 per cent, driven by rising spirits and beer orders in Africa and a strong recovery in trade across Latin America amid high demand for scotch brands like Johnnie Walker.

However, unfavourable exchange rate movements led to Diageo's reported net sales declining by 0.6 per cent to $10.9billion (£8.9billion) and its operating profits shrinking by 4.9 per cent to under $3.2billion. UK revenues rose by 2 per cent thanks as continued booming demand for Guinness, which saw net sales grow by 13 per cent over the half year, offset lower spirits sales. Diageo recently denied it was planning to sell its Guinness brand.

Over Christmas, a social media-fueled surge in Guinness orders in the UK led to pubs running out of the Irish stout and forced the introduction of rationing. Boss Crew told reporters on Tuesday: 'We are working around the clock to replenish our stock levels and are boosting those quickly. 'We are spending €200million on a new factory in Kildare, in order to bring more capacity online.'. Diageo has also rebuffed claims that it intends to offload its 34 per cent stake in Moet Hennessy, whose largest shareholder is French luxury goods conglomerate LVMH.

Diageo shares dropped 4.2 per cent to £22.66 on Tuesday morning, making them the second-biggest faller on the FTSE 100 behind Vodafone Group. Adam Vettese, market analyst at eToro, noted: 'The price is close to revisiting lows last seen in October which to put in perspective was only slightly above where shares traded during the height of the pandemic. 'While this may seem like a chance to pick shares up on the cheap, if the mooted tariffs do come into force then it’s difficult to bet against the price falling even further in the interim.'.