Later this month, Donald Trump can be inaugurated as the brand new President of america. He has already made it clear that imports from around the globe might be topic to tariffs. Although it seems he’ll goal international locations corresponding to China, the UK may additionally come beneath strain.

Listed below are two UK shares that export so much to the US to regulate.

Needing a drink

The primary is Diageo (LSE:DGE). The worldwide drinks agency has seen the share price fall by 11% over the previous yr.

It’s struggled over this era as a consequence of weaker efficiency in Latin America and the Caribbean. Diageo shares additionally got here beneath strain in October as a consequence of information that China would impose precautionary anti-dumping tariffs on brandy imported from Europe. That is already one case of how governments can affect the actions of firms on this sector.

The priority going ahead is that the US stays one of many largest markets for the enterprise. This has been an issue up to now. In 2019, the US imposed a 25% tariff on Scotch whisky as a part of a commerce dispute, which prompted Diageo to report a considerable unfavorable influence on gross sales within the US.

If related measures have been to be placed on alcohol this time round, Diageo may face one other unsure interval. It may cross price will increase onto clients, which may decrease demand. Or it may soak up the tariff, reducing revenue margins.

Nevertheless, Diageo may improve US manufacturing to keep away from potential tariffs. It may additionally give attention to different worthwhile markets outdoors of the US. Historical past reveals that Diageo can stay worthwhile regardless of difficulties with import and export restrictions around the globe, and this might be no totally different.

Supplying US firms

One other firm I’m watching is Rolls-Royce (LSE:RR). The expansion inventory‘s carried out extremely properly over the previous yr and has risen by 93%.

The agency’s seen continued advantages from the transformation efforts beneath CEO Tufan Erginbilgiç. The important thing civil aerospace division has rebounded from the pandemic issues, together with greater demand for defence and energy methods markets.

That is all nice, however one danger for the yr forward is that the enterprise has a good presence within the US, supplying engines to main US plane producers corresponding to Boeing. If the brand new President chooses to impose tariffs on aerospace elements this might harm Rolls-Royce. This might additionally consider with the President attempting to push for extra home manufacturing for US firms like Boeing.

We’ll have to attend and see what actions Trump will tackle British (or just put non-US) items and providers. It is likely to be a storm in a teacup, or it might be that he’ll focus his efforts on different international locations as a substitute. Due to this fact, I’m not writing off investing in these shares in 2025, however fairly holding an in depth eye on them within the coming months to have a clearer view.