President Trump has announced punishing 100 percent tariffs on pharmaceuticals in a shock to the industry.
The European Union thought that it had made a tariff agreement that limited all tariffs – including pharmaceuticals – to a maximum of 15 percent.
“When you account for the exceptions that we secured and the additional rates which others have on top – we have the best agreement. Without any doubt”, said European Commission President, Ursula von der Leyen, earlier this month.
But that is now in doubt.
According to a document released by the US trade office, the deal with the EU covers “generic pharmaceuticals and their ingredients and chemical precursors”.
But Trump said overnight that 100 percent tariffs would apply to “any branded or patented” pharmaceutical product, unless manufacturing is shifted from Europe to the US.
Reacting to Trump’s announcement, Tánaiste Simon Harris TD said:
“We will be studying the impact of this announcement, which includes a number of exemptions, together with EU colleagues.
“I want to stress, however, that the EU and US Joint Statement issued on 21 August last made absolutely clear that any new tariffs announced by the US on pharmaceuticals under its Section 232 investigation would be capped at 15 percent for pharma products being exported by the EU.
“This remains the case and underlines again the value of the agreement reached last month.
“Returning home after a series of valuable meetings in both New York and Washington, where I met with US Secretary of Commerce, Howard Lutnick, I remain as convinced as ever of the mutually beneficial nature of the dynamic, two way economic partnership between Ireland and the US as well as between the EU and the US.”
Responding to Trump’s announcement, the European Commission’s trade spokesperson, Olaf Gill, insisted that the agreed 15 percent limit would apply to pharma companies in the EU.
“As the EU-US Joint Statement makes clear:
‘The United States intends to promptly ensure that the tariff rate, comprised of the [World Trade Organization Most Favoured Nation] MFN tariff and the tariff imposed pursuant to Section 232 of the Trade Expansion Act of 1962, applied to originating goods of the European Union subject to Section 232 actions on pharmaceuticals, semiconductors, and lumber does not exceed 15 percent.’
This clear all-inclusive 15 percent tariff ceiling for EU exports represents an insurance policy that no higher tariffs will emerge for European economic operators. The EU is the only trade partner to achieve this outcome with the US.
The EU and US continue engaging towards implementing the Joint Statement commitments, while exploring further areas for tariff exemptions as well as wider cooperation.”