Insulin, heart treatments, and antibiotics have historically crossed borders without tariffs to ensure affordability, but this could soon change. President Trump has indicated plans to impose higher tariffs on pharmaceuticals as part of a strategy to reshape global trade and encourage manufacturing in the United States.
This month, Trump stated that pharmaceutical tariffs could be implemented in the “not too distant future,” raising concerns about the potential impact on drugs produced in the European Union. Pharmaceutical products and chemicals represent the EU's largest export to the U.S., including well-known medications like Ozempic, cancer treatments, and flu vaccines, which are highly profitable in the American market.
Léa Auffret, head of international affairs for the European Consumer Organization, expressed concern over the implications of placing essential medications in the midst of a trade conflict. European pharmaceutical companies may respond to tariffs in various ways, including increasing production in the U.S. or raising prices to offset tariff costs, which could ultimately burden both American and European patients.
Some companies might shift profits to the U.S. for accounting purposes while maintaining production overseas, avoiding the costs of relocating. Auffret's organization has cautioned European officials against retaliating with tariffs on American drugs, as such actions could significantly harm European consumers.
The pharmaceutical sector's complexity complicates rapid price adjustments due to existing agreements with insurers and government regulations. Economists note that the U.S. has not imposed tariffs on pharmaceuticals for a long time, making the potential changes unpredictable.
Despite a temporary pause on reciprocal tariffs, Trump has maintained some industry-specific tariffs and indicated that pharmaceuticals would be targeted next, with investigations already underway. Experts predict new tariffs could reach 25 percent, similar to those imposed on steel and aluminum.
Countries central to Europe's drug industry, particularly Ireland, are particularly concerned, as pharmaceuticals account for 80 percent of their exports to the U.S. Many drug companies moved to Ireland for its low corporate tax rates and skilled workforce, with the sector exporting approximately $66 billion in pharmaceutical products to the U.S. last year.
As companies prepare for potential tariffs, they are rushing to export pharmaceuticals from Ireland to the U.S. Other European countries, including Germany and Belgium, are also major exporters facing similar challenges.
European leaders are actively engaging with U.S. officials to address these concerns. The European Commission's president has met with industry representatives to discuss the potential impact of tariffs and the need for favorable conditions for pharmaceutical production in Europe.
Industry groups have warned that tariffs could disrupt supply chains, hinder patient access to medications, and negatively affect research and development. Executives from major pharmaceutical companies have emphasized that tariffs on medicines could lead to shortages and other complications.
Additionally, the European Union is attempting to bolster its capacity to manufacture generic drugs, which are less profitable but essential. If U.S. tariffs drive generic manufacturers from Asia to seek new markets in Europe, this could undermine the EU's efforts to establish a domestic generics manufacturing base.
Overall, the potential for increased U.S. investment in pharmaceuticals raises concerns about the long-term implications for Europe's drug industry and the availability of essential medications for patients on both sides of the Atlantic.