US President Donald Trump has announced a 100% tariff on imports of branded drugs starting from October, targeting the European Union, the main supplier of patented medicines to the US. The move aims to encourage manufacturers to shift production to America. Trump has been overhauling US trade policy, imposing tariffs on key trading partners to protect domestic industry. He believes tariffs can fix unfair trade deficits and prevent other countries from taking advantage of the US.
The new tariff will not apply to companies already investing in US manufacturing, with exemptions granted if a plant is under construction. This measure is expected to hit Europe hardest, as it is the dominant supplier of branded drugs to the US, led by countries such as Ireland, Germany, Switzerland, and Belgium. Generic medicines, mainly imported from India, are exempt from the levy.
In April, Trump criticized the EU for its trade practices, claiming that the bloc exerts pressure on pharmaceutical companies to keep prices low in Europe while refusing to shoulder the costs of research and development. Major pharmaceutical firms, including Merck & Co., AstraZeneca, and Johnson & Johnson, have since announced billions in new US manufacturing projects. However, 32 pharmaceutical companies have warned that Trump’s tariffs could shift over €100 billion in investment out of Europe over the next few years.
The CEOs of these companies have urged the European Commission to overhaul pricing rules, strengthen patent protections, and streamline regulation to keep the continent competitive. The US president’s decision to impose tariffs on branded drugs has significant implications for the pharmaceutical industry and international trade. As the EU is the primary supplier of patented medicines to the US, the tariff is likely to have a substantial impact on the industry and the global economy.
The introduction of the tariff also highlights the ongoing trade tensions between the US and the EU. The EU has been accused of exerting pressure on pharmaceutical companies to keep prices low, which has led to concerns about the sustainability of the industry. The tariff is seen as a measure to address this issue and encourage companies to invest in US manufacturing. The effects of the tariff will be closely watched, and its impact on the pharmaceutical industry and international trade will be significant.
