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The Trump administration is set to honour a 15 per cent tariff cap on pharmaceutical imports from the EU and Japan, providing a significant relief from the 100 per cent levy on drugs announced by the US president on Thursday.
The 15 per cent ceiling is in line with trade deals that Japan and the EU have with the US. It was first reported by CNBC.
Late on Thursday, Donald Trump posted on his Truth Social platform that the US would impose 100 per cent tariffs on imports of patented or branded pharmaceuticals beginning on October 1. Generic drugs, which account for the majority of imports to the US, were exempt from the levy.
Unlike many previous White House tariff announcements, the pharma levy had been widely expected. In April, the Trump administration launched a national security probe into pharmaceutical goods, often a precursor to imposing a tariff.
On Friday, shares of drugmakers from AstraZeneca to Merck moved largely in line with the broader stock market.
The announcement on Thursday evening still sparked confusion for companies and investors. Trump said the tariffs would not apply if a company “is building” manufacturing sites in the US. He added that this would be “defined as, ‘breaking ground’ and/or ‘under construction’”.
“The definition of manufacturing is unclear to us,” Jefferies, an investment bank, said in a report on Friday. “It remains uncertain if, and how, these tariffs will actually be implemented.”
Pharmaceutical companies have been racing to announce new manufacturing projects in the US as Trump’s tariff threat loomed over the sector.
AstraZeneca and GSK, as well as Swiss groups Novartis and Roche, have in recent months announced plans to invest in America or started building new plants.
“Despite the lack of clarity, we believe the new tariff will likely have a minimal impact on US and European Big Pharma companies,” Morningstar, a mutual fund data and analysis provider, said in a report on Friday.
It added that Eli Lilly and Novo Nordisk were already expanding US manufacturing for their popular weight-loss drugs. Novartis and GSK have also announced multibillion-dollar American investment plans, which might exempt them from the new tariffs.
