A number of UK companies have found themselves in the firing line as the US unveiled plans under consideration to slap additional tariffs worth around US$3.1bn on imports from both the UK and the European Union.
Products being considered for new or additional duties include olives, beer, gin, cheeses, yoghurts, aircraft parts and leather handbags.
The tariffs from the US Trade Representative are subject to a public comment period that is due to end on July 26, however if the US follows through with its plans a number of major London-listed firms could be jeopardy.
Diageo PLC (LON:DGE) is one such firm, which could find itself hit by the additional tariffs on gin as the US enters its peak G&T season, while its Johnny Walker whisky brand could also suffer under additional duties.
Meanwhile, luxury brands are also potentially facing pressure if they deal in leather products, with LSE-listed Burberry Group PLC (LON:BRBY) and handbag maker Mulberry Group PLC (LON:MUL) in the firing line alongside its continental peers such as Givenchy, Hermes and Louis Vuitton owner LVMH.
The report said the US’s move to impose additional tariffs related to its now 15-year long fight in the World Trade Organisation (WTO) over aircraft subsidies after the body said both the EU and the US had illegally supported their respective aircraft industries, particularly US group Boeing and France’s Airbus.
It also less than a year since the dispute led to the imposition of more US tariffs, with Donald Trump slapping duties on US$7.5bn of EU exports last October.
“Just as Trump seemed to momentarily put to bed the market’s fears surrounding the US-China trade situation – the President tweeted that their deal was intact – a situation seems to be about to flare up between the States and Europe”, said Connor Campbell, financial analyst at Spreadex.
“It’s not the kind of thing investors want to hear given they are already panicking at the prospect of an increasingly likely [coronavirus] second wave – or extended first wave, in the case of the United States – around the world, and what that would mean for the global economy,” he added.
Anyone that has followed the US President for the last four years will not be surprised by these actions, said Craig Erlam at Oanda.
“Investors will be hoping the EU takes a far calmer and less combative approach but who knows,” he added.
“It's an election year and the President is vulnerable, they may take a far stronger approach and try to hit the administration where it hurts ahead of the November vote. It's a gamble from the White House but, again, we may see plenty of these in the coming months.”
Shares in Diageo sank 3.2% to 2,710p in lunchtime trading while Meggitt dropped 3.6% to 303.9p, Rolls Royce fell 2.3% to 310.6p and Burberry slipped 3.2% to 1,525p and Mulberry 4% to 195p .