The trade deal struck between the U.S. and the European Union will allow the EU to escape the latest tariffs President Donald Trump has threatened to place on pharmaceuticals, Newsweek understands.
On Tuesday, Trump said he was planning to place a “small tariff” on drug imports that will eventually grow to 250 percent. But thanks to the pact agreed in late July, the EU will see its pharmaceuticals hit with only a 15-percent tariff, far below the rates other countries may encounter.
Why It Matters
This aligns with the terms of the deal published by the White House, and European Commission President Ursula von der Leyen’s assurance that pharmaceuticals were among the sectors for which the 15 percent rate represented a firm “ceiling.”
However, Trump’s comments on new pharmaceutical tariffs sparked uncertainty over whether these would apply on top of agreed rates, triggering the share prices of many European drug companies to plummet.
What To Know
During an interview with CNBC on Tuesday, Trump said he was planning to impose new sectoral duties on pharmaceuticals, like the tariffs already placed on steel, aluminum and auto imports.
“On pharmaceuticals, we’ll be putting a initially small tariff on pharmaceuticals,” Trump said. “But in one year, one and a half years maximum, it’s going to go to 150 percent, and then it’s going to go to 250 percent, because we want pharmaceuticals made in our country.”
The president went on to say that he would be announcing specifics “within a week or so,” and that this new tariff would be separate from country-specific duties.
The statement rocked drug companies worldwide, including those in the EU. Shares in Denmark-based Novo Nordisk fell more than 5 percent over the course of Wednesday’s trades, with those in Germany-based Bayer AG dropping by nearly 10 percent. According to The Guardian, the Europe’s Stoxx Health Care index, which tracks the performance of major health care sector firms across Europe, dropped to its lowest level since mid-April.
EU exports of medicinal and pharmaceutical products to the U.S. totaled over $100 billion for the first time in 2024, according to Eurostat, equating to 38 percent of its total exports in this area.
What People Are Saying
White House deputy press secretary Kush Desai previously told Newsweek: “President Donald Trump is committed to safeguarding our national and economic security, and that includes ensuring that Americans are never again left in the lurch as they were during the COVID era when shortages of imported drugs and other lifesaving medical equipment put lives at risk.”
The White House, in a fact sheet published following the EU trade deal, said: “As part of President Donald Trump’s strategy to establish balanced trade, the European Union will pay the United States a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. However, the sectoral tariffs on steel, aluminum, and copper will remain unchanged—the EU will continue to pay 50% and the parties will discuss securing supply chains for these products.”
What Happens Next?
While the U.S. has officially handed the bloc a 15 percent tariff on most of its imports as of Thursday, certain disagreements remain over the terms of the EU trade deal.
Some member nations have framed this as an informal understanding rather than a finalized pact. “This is not the end of the story, the negotiation has to continue,” French President Emmanuel Macron told his ministers shortly after the deal was signed, according to Euractiv.
Meanwhile, Trump told CNBC that if the EU fails to follow through on the investment commitments outlined in the deal, then he will hike their tariff rates to 35 percent.
Regarding the 250-percent tariff on pharmaceuticals, White House deputy press secretary Kush Desai told Newsweek that no decisions should be considered final “until officially announced by President Donald Trump.”
The post Europe to Escape New Trump Pharmaceutical Tariffs appeared first on Newsweek.
