US and EU agree to trade deal with 15% tariff rate, questions remain on pharmaceuticals

The United States and the 27-nation European Union have reached a trade agreement that includes 15% tariffs on most products. The EU was previously facing a 30% tariff rate slated to go into effect on Aug. 1.

European Commission President Ursula von der Leyen in a statement said the new trade framework with the U.S. includes a single 15% tariff rate for the vast majority of EU exports, including pharmaceuticals.

“This rate applies across most sectors, including cars, semiconductors and pharmaceuticals,” according to von der Leyen. “We have also agreed on zero-for-zero tariffs on a number of strategic products. This includes all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials.”

The EU had been pushing hard to cap future tariffs on pharmaceuticals in its deal with President Donald Trump. In April, European pharmaceutical companies warned von der Leyen that Trump’s tariffs would expedite the industry’s shift away from Europe toward the U.S., with Europe’s pharma trade lobby EFPIA calling on von der Leyen to push for “rapid, radical policy change” to mitigate the “risk of exodus” to the U.S.

EFPIA in an emailed statement to Pharma Manufacturing said they are “still looking at the detail” of the trade agreement between Trump and von der Leyen.

However, Germany’s Association of Research-Based Pharmaceutical Companies (vfa) — which represents 46 manufacturers — warned in a Monday press release of “drastic” consequences for the industry, as the new tariff rate is “likely to not only result in significant additional costs for manufacturers” while jeopardizing international patient care.

“Under the new transatlantic agreement, flat-rate tariffs of 15% will apply to almost all product groups in the future,” according to vfa. “For pharmaceuticals, this means a break with the practice of duty-free exports, which has so far applied within the framework of the WTO and bilateral agreements.”     

At the same time, the U.S. and EU appear to differ on how their new deal addresses pharma-specific tariffs. Trump was asked directly in a press conference on Sunday with von der Leyen whether the agreement includes pharmaceuticals.

“No, not pharmaceuticals,” Trump replied, implying they would be subject later to a higher industry-specific tariff. “A lot of companies are coming into the U.S. and that’s unrelated to this deal.”

While von der Leyen in another press conference insisted that the EU agreed to a 15% tariff on pharmaceuticals, she added: “Whatever decisions later by the president of the U.S., that’s on a different sheet of paper.”

Pharma-specific tariffs loom

Earlier this month, Trump threatened to impose up to a 200% tariff on pharmaceuticals imported to the U.S., as part of his administration’s strategy to pressure drugmakers to increase domestic manufacturing of medicines. He has previously indicated the White House will make an announcement “very soon” regarding pharma-specific tariffs.

Although the pharma industry has so far escaped tariffs, Trump has repeatedly threatened to hit the sector with specific levies. In April, the Commerce Department launched an investigation into whether the importation of certain pharmaceuticals and pharmaceutical ingredients may threaten U.S. national security and whether tariffs are necessary. Commerce Secretary Howard Lutnick told CNBC earlier this month that details on pharma-specific tariffs will come at the end of July.

For now, it appears exports of pharmaceuticals from the EU will face a 15% tariff rate, as industry-specific U.S. trade policies remain under review by the Trump administration.

A survey released in March by the Biotechnology Innovation Organization (BIO) found a “staggering” 94% of U.S. biotech companies expect “surging” manufacturing costs, if tariffs are placed on imports from the EU.

“Proposed tariffs on the EU would force 50% of companies to scramble for new research and manufacturing partners,” according to BIO, with 80% of biotech companies surveyed indicating that they would need at least 12 months to find alternative suppliers — while 44% would require more than two years.