Shares of Diageo (NYSE:DEO) rose 4% on Thursday after President Donald Trump announced he will eliminate tariffs and restrictions affecting the whiskey trade between Scotland and Kentucky.
The president made the declaration in the wake of a White House visit by the King and Queen of the United Kingdom. He framed the move as a response to longstanding trade frictions between the two regions and said it concerns cooperation on whiskey and bourbon production.
"In Honor of the King and Queen of the United Kingdom, who have just left the White House, soon headed back to their wonderful Country, I will be removing the Tariffs and Restrictions on Whiskey having to do with Scotland’s ability to work with the Commonwealth of Kentucky on Whiskey and Bourbon, two very important Industries within Scotland and Kentucky," Trump stated.
The president added that the tariff removal addresses entrenched trade issues, specifically mentioning matters related to wooden barrels used in whiskey production. He also said the King and Queen influenced the decision "without hardly even asking."
Diageo, which is headquartered in London, produces Scotch whiskey brands such as Johnnie Walker. Those Scotch brands had been subject to U.S. tariffs prior to the announcement.
The details released in the president's statement focus on eliminating the existing tariffs and restrictions tied to the Scotland-Kentucky whiskey relationship and identify wooden barrels as one of the trade issues being addressed.
Market reaction was immediate for Diageo shares, which recorded a 4% uptick on the day of the announcement. The statement linked the policy change directly to the recent royal visit to the White House.
Summary
President Trump announced the removal of tariffs and restrictions impacting Scotland's ability to work with Kentucky on whiskey and bourbon. The move was made following a visit by the King and Queen of the United Kingdom and cited longstanding trade issues, including those involving wooden barrels. Diageo, a London-based producer of Scotch brands such as Johnnie Walker, saw its shares rise 4% on the news.
Key points
- Diageo shares increased by 4% on Thursday following the tariff removal announcement.
- The policy change was framed as resolving longstanding trade issues between Scotland and Kentucky, with specific reference to wooden barrels used in production.
- The decision followed a White House visit by the King and Queen of the United Kingdom and was described by the president as influenced by that visit.
Risks and uncertainties
- The article notes longstanding trade issues between Scotland and Kentucky but does not specify the precise scope or legal mechanics of the tariff and restriction removals.
- Details about how the removal will affect individual producers, supply chains or contractual arrangements are not provided in the statement cited.