Shares in distilling giant Diageo, owner of Johnnie Walker whisky, fell as investors assessed the potential impact of Donald Trump’s tariffs.

Mr Trump’s move could affect Diageo’s supply chain and pricing on its tequila and Canadian whiskey brands. It could also be hit if the tariffs are extended to the UK.

In a statement with half-year results today, Diageo chief executive Debra Crew said the company “has anticipated and planned for a number of potential scenarios regarding tariffs in recent months.

“The confirmation at the weekend of the implementation of tariffs in the US, whilst anticipated, could very well impact this building momentum. It also adds 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 supporting the US hospitality industry, including consumers, employees, distributors, restaurants, bars and other retail outlets.”

The company reported a 1% increase in organic net sales for the first half, though operating profit declined 4.9%. The dividend is unchanged at 40.5 cents. Shares in Diageo, which closed by more than 3% on Monday, fell a further 1.59% (37.5p) on Tuesday to 2327.5p.

US markets recovered on Tuesday after Monday’s global rout, prompted by Mr Trump’s determination to press ahead with tariffs. There had been speculation that he might not go through with his threat.

Beijing intends to introduce retaliatory tariffs on a range of US products after Mr Trump imposed a 10% levy on Chinese goods.

China’s counter measures, announced early today, include a 15% tax on coal and liquefied natural gas imports from the US. Crude oil, agricultural machinery, pickup trucks and large-engine cars will face a 10% tariff.

Markets remained cautious despite Mr Trump pausing his threatened 25% tariff on Mexico and Canada after agreements to beef up policing of their borders.

Fresh from hitting all-time records last week the FTSE 100 index plunged 90.4 points (1.04%) on Monday to 8,583.56, while the FTSE 250 declined 1.14%. Trading was calmer during Tuesday’s session as traders paused to consider what might happen next. The FTSE 100 closed 12.79 points lower at 8,570.77.

On Wall Street, the broadly based S&P 500 rose 0.7%, the Dow Jones Industrial Average was 0.3% higher and the technology-focused ­Nasdaq saw a gain of 1.4%. 

In currency markets, sterling rose 0.17% on the dollar to trade at $1.2416, and gained 0.58% against the euro, changing hands at €1.2029.

AJ Bell head of financial analysis Danni Hewson said: “What’s crucial here is the unpredictability that had been a trademark of the last Trump administration seems to be back, and markets don’t like uncertainty. How can an investor price in risk if the risk keeps changing?”

IG chief market analyst Chris Beauchamp said: “The strong rhetoric coming from all sides suggests that this will not be a short-lived trade war.”

“It seems probable that richly-valued US stocks like the ‘Magnificent Seven’ will continue to suffer losses as investors look to book gains and wait out the storm.”

Mining stocks recovered after being among the biggest fallers on Monday.

On the day that shareholders in two Baillie Gifford managed trusts voted down a hedge fund’s plans to unseat their boards, a third trust managed by the Edinburgh-based company, Scottish Mortgage Investment Trust slumped 4.05%, underperforming the broader market. It clawed back some of the loss on Tuesday to close 2.5% higher.