As if we Diageo (LSE: DGE) shareholders haven’t had a rough enough time lately, a new potential threat looms on the horizon. That’s the US presidential election next week. Should I sell this FTSE 100 stock before then? Here’s my take.

Tariff man

On 5 November, the US will elect its next president. According to the polls, it’s too close to call. But a Donald Trump victory could cause a fair bit of volatility in the Diageo share price.

That’s because he’s promised to impose a 10%-20% tariff on all imports coming into the country (and 60% from China!). He’s even declared himself “Tariff Man“.

Of course, we don’t know who will win the election or the exact details of the proposed import tariffs. But the US is Diageo’s key spirits market, so this situation would have implications for the company. It would likely compel the firm to raise prices on some of its key products stateside, potentially reducing sales.

Economists warn these tariffs would cause a spike in inflation, as countries retaliate and companies pass on rising costs to consumers. Needless to say, this wouldn’t be a great backdrop for Diageo (and likely many other businesses).

Protected designation of origin

Some drinks famously have protected origin of status, which means they’re recognised as unique to a specific geographic region and cannot legally be produced elsewhere (in the US, say) under the same name. These include champagne, Scotch whisky, and tequila (from France, Scotland, and Mexico, respectively).

Diageo owns leading brands in Scotch (Johnnie Walker) and tequila (Don Julio and Casamigos), and has a large stake in Moët Hennessy, the owner of Hennessy cognac and Moët & Chandon champagne.

From what I can gather, around a quarter of Diageo’s sales could be affected by these proposed tariffs.

Industry-wide slowdown

It’s hard to be very bullish on the shares in the near term. Even management is warning of another “challenging” year coming up. The share price has already fallen 23% in the last year.

Yet it’s important to remember that the whole industry has been in a downturn. The problem isn’t specific to Diageo. Here’s how the share prices of other large booze firms have fared over the past five years.

• Pernod Ricard -30%
• Remy Cointreau -51%
• Brown-Forman -33%
• Heineken -17%
• Anheuser-Busch Inbev -23%

The world’s largest alcohol company, baijiu producer Kweichow Moutai, has done better. Its shares are up 30% in five years, but the firm has still been battling sluggish demand in its home market of China.

Should I call time?

Diageo stock looks good value to me, trading at 16.6 times forecast earnings for FY26, with a prospective 3.56% dividend yield. The business remains highly cash generative, with many of its top brands still dominating their categories, so I’m hopeful the dividend can keep growing long term.

Therefore, I’m not going to sell my holding, despite the looming threat of tariffs. In fact, if Trump wins and the stock falls further (pushing the dividend yield towards 4%), I’ll likely add to my position.