Shelf of pharmaceutical products.
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Pharma firms are calling for clarity on tariffs imposed under the new U.S.-EU trade agreement, as analysts warn that punitive sector-specific levies could risk blowing up the entire deal.
Ambiguity abounds around the terms for pharmaceutical goods under the trade truce agreed Sunday, which imposes 15% tariffs on EU goods imported to the U.S.
U.S. President Donald Trump announced a “straight across” tariff on “automobiles and everything else,” during a news briefing, while simultaneously suggesting that pharma was “unrelated to this deal.”
European Commission President Ursula von der Leyen, meanwhile, dubbed the agreed levy as “all-inclusive,” and indicated that Europe would be excluded from a forthcoming announcement on pharma tariffs.
“We have 15% for pharmaceuticals. Whatever the decision later on is, of the president of the U.S., how to deal with pharmaceuticals in general globally, that’s on a different sheet of paper,” Von der Leyen said Sunday.
President Trump said earlier this month that a tariff announcement on pharmaceutical imports into the U.S. would come “very soon” and could run as high as 200%. It comes after the administration launched a so-called Section 232 investigation into the sector, which explores the impact of pharma imports on national security, with the outcome due by August.
Even if pharma tariffs were to come in at the lower 15% range, analysts suggest the hit to European firms and the bloc’s broader economy would be significant.
“The questions around pharma tariffs are highly material, given the volume of imports from the EU,” Wolfe Research analysts wrote in a note Monday.
Medicines and pharmaceutical products represent the EU’s largest export to the U.S., totaling around $120 billion in 2024. Analysts estimate that 15% levies could ramp up industry costs by $13 billion to $19 billion per year, according to Reuters.
If the rate were to come in higher, however, they say it could undermine the long-negotiated deal.
“Any surprise increases to the 15% ceiling on pharma tariffs would threaten the broader trade truce,” Eurasia Group analysts wrote in a Monday note.
“If any dispute about these sectoral tariffs does not sabotage the broader agreement,” the hit to the European economy could be severe, Rabobank analysts added.
In the meantime, firms are left struggling to navigate the uncertainty.
“We’ve been asking for exemptions from [tariffs] in the U.S., in the EU, but also in China. That’s something we have been pleading for,” Philips CEO Roy Jakobs told CNBC’s “Squawk Box Europe” on Tuesday.
“In the current deal that has been announced that was not part of it, so we keep having that dialogue.”
