EU-US trade deal sparks uncertainty over pharmaceutical tariffs

A newly announced trade deal between the European Union (EU) and the United States could add substantial costs to the pharmaceutical sector, with estimates suggesting an additional $13 billion to $19 billion in expenses for drugmakers. The deal, which includes a 15 per cent tariff on most EU goods, does not yet provide clarity on how it will affect pharmaceuticals. Although medicines were excluded from the deal on July 27, they remain subject to the outcome of a US national security investigation, which could potentially impose tariffs of up to 15 per cent.

Tariff uncertainty clouds the future for pharmaceuticals

Pharmaceuticals are the EU’s largest export to the US by value, accounting for about 60 per cent of all EU pharmaceutical imports. Historically, these products have been exempt from tariffs, but the new trade agreement could change that. The investigation into the pharmaceutical sector, initiated by the Trump administration, has created uncertainty for the industry. US President Donald Trump recently hinted that tariffs could rise as high as 200 per cent on pharmaceuticals. However, some analysts do not expect additional tariffs beyond the 15 per cent already proposed, while others caution that the situation is still fluid.

Despite the official announcement of the new EU-US deal on July 27, the pharmaceutical sector was not included in the blanket tariff, as the US could not commit to any decisions regarding tariffs until the national security review is completed. While the EU has expressed confidence that any new tariffs will be capped at 15 per cent, the lack of clarity has left pharmaceutical companies facing potential financial strain.

Impact on EU drugmakers and US consumers

Industry analysts have warned that the added costs from tariffs could eventually trickle down to US consumers, raising prices on imported drugs unless companies take mitigation steps. UBS analysts noted that the EU could push for protective measures for pharmaceutical exports as part of ongoing negotiations. Major pharmaceutical firms like Sanofi and Roche are already taking preemptive actions to minimise disruptions, with Roche increasing US inventories and Sanofi selling a manufacturing facility in New Jersey to avoid supply chain bottlenecks.

In the short term, however, no tariffs are expected to be imposed on pharmaceuticals immediately. US officials clarified that there will be no changes to the zero per cent tariff rate on pharmaceutical products for now, maintaining consistency with existing trade frameworks and WTO commitments. As the situation evolves, the pharmaceutical industry remains on edge, with questions surrounding tariffs still lingering in the wake of the EU-US trade deal.