Trump Trade News: U.S. and India Row Over Russian Oil Tariff Threat, Diageo Hit

Guinness brewer Diageo said Tuesday it now expects to take a $200 million annual hit from tariffs. (Brian Ach/Getty Images for Diageo Beer Company USA)

The U.S. and India remained in a trade deadlock early Tuesday, after President Donald Trump’s threats of higher tariffs sparked a flare-up in tensions between two of the world’s largest economies.

Trump said in a Truth Social post Monday that he would be “substantially raising” levies on India over its purchasing of sanctioned Russian oil. It wasn’t clear if he planned to hike tariffs above the 25% rate that New Delhi is already facing.

India’s Ministry of External Affairs hit back with a statement calling its imports of Russian crude a “necessity,” adding that “the targeting of India is unjustified and unreasonable.” The country’s flagship Nifty 50 index slipped 0.5% on Monday, but was up 0.6% in early trading Tuesday.

Trump has already unveiled tariffs for most of the world’s largest economies, including Japan, the U.K., and the European Union. With just days to go until the Aug. 7 deadline when rates are set to snap higher, the stalemate with India is one remaining source of market uncertainty.

Diageo Meets Guidance, Flags Tariff Hit

Alcoholic drinks maker Diageo reported annual results that came in line with previous guidance on Tuesday, as it bids to show investors that it’s weathering the twin storms of tariffs and young people drinking less.

Shares in the company, which owns a portfolio of brands including Guinness and Don Julio, jumped 6.4% in early trading. London’s flagship FTSE 100 index was up 0.3%.

Diageo said in a statement that it expects to take a $200 million hit from tariffs and expects to be able to mitigate half of that. The company had previously forecast a $150 million impact.

Its guidance relies on the assumption that Trump sticks to his 10% tariffs on the U.K. and 15% levies on the European Union, and that imports of Mexican and Canadian spirits into the U.S. remain exempt from duties under the free-trade agreement between the three countries.

Switzerland Faces a Recession, Economists Warn

Switzerland’s economy could be set to slump due to tariffs, Pantheon Macroeconomics has warned.

Economists Claus Vistesen and Melanie Debono said in a research note they’re now expecting the Alpine nation to suffer a recession over the second half of this year because of the 39% levy that Trump set last week. They also forecast that the Swiss National Bank will cut interest rates by a quarter point in September.

On Monday, the Swiss government said it would extend negotiations with the U.S. past Thursday and that it was “ready to present a more attractive offer,” if necessary.

Switzerland’s main exports to the U.S. include pharmaceuticals and gold, as well as luxury watches and chocolate.

Write to George Glover at george.glover@dowjones.com