Trump's EU Deal Could Cost Pharma Industry $19 Billion, Analyst Warns
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The trade deal struck between the European Union and the United States over the weekend could cost the pharmaceutical industry billions, thanks to the 15 percent tariff rate applied to most goods under the terms of the agreement.
Though the EU is set to invest hundreds of billions of dollars into the U.S. through energy purchases and other investments, pharmaceutical companies could incur additional expenses totaling $19 billion, according to Bernstein analyst Courtney Breen, cited by Reuters.
Breen added that firms could mitigate some of these costs through inventory stockpiling and other strategies.
Newsweek reached out to the Commerce Department and European Commission via email for comment.
Why It Matters
Pharmaceuticals were the fifth most imported product to the U.S. in 2024, according to the Observatory of Economic Complexity think tank, and EU member nations accounted for the lion's share of these. While certain aspects of the preliminary trade deal are yet to be finalized and remain subject to approval by European leaders, 15 percent tariffs could prove a significant challenge for companies reliant on imported European pharmaceuticals, while resulting in higher drug prices for U.S. consumers.
This is in addition to the impact on European pharma firms, which are already bracing for the results of the ongoing Commerce Department investigation into whether imported pharmaceuticals constitute a threat to U.S. national security that justifies even more levies.
What To Know
The preliminary agreement between the U.S. and EU was unveiled during a meeting between President Donald Trump and European Commission President Ursula von der Leyen in Scotland on Sunday. The pair contradicted each other on the question of pharmaceuticals—the former saying these were exempt and the latter saying the opposite, resulting in differing reports on whether European drugs would be subject to the agreed 15-percent tariff rate.
However, officials from both sides later confirmed the 15 percent rate on pharmaceutical imports, according to reports from Bloomberg and Reuters. In a subsequent press conference, von der Leyen said that the only exception for pharma products would be for "certain generics," without specifying what these would be.
Main: President Donald Trump at a meeting with European Commission President Ursula von der Leyen in Turnberry, Scotland, on July 27, 2025. Inset: Stock image of medications.
Main: President Donald Trump at a meeting with European Commission President Ursula von der Leyen in Turnberry, Scotland, on July 27, 2025. Inset: Stock image of medications.
Frank May / Andrew Harnik/picture-alliance/dpa/AP Images / Getty Images
Pharmaceutical firms are also bracing for the outcome of an ongoing investigation by the Commerce Department into the national security implications of America's medicine imports. This probe was launched in April by Commerce Secretary Howard Lutnick under Section 232 of the 1962 Trade Expansion Act.
Should it conclude that pharmaceutical imports threaten U.S. security, this could result in import restrictions or a higher tariff regardless of Sunday's agreement with the EU.
However, Reuters cited Wall Street analysts as saying that the investigation will not result in additional sectoral duties for the EU, though it noted that this aspect of the agreement remains unclear.
According to Euronews, citing EU sources familiar with the matter, pharmaceuticals were technically excluded from Sunday's agreement, and any decision by Trump to impose or lessen tariffs on them would have to wait until after the investigation concludes.
What People Are Saying
European Commission Ursula von der Leyen, at a press conference: "It's agreed that we have 15 percent [tariffs] for pharmaceuticals. Whatever the decision later on is, of the president of the U.S., how to deal with pharmaceuticals in general globally, that's on a different sheet of paper."
She said earlier that the 15 percent tariff rate is "a clear ceiling. So no stacking. All-inclusive."
Kimberley Clausing, an economist and professor of Tax Law and Policy at UCLA School of Law, told Newsweek: "The United States is levying large new tariffs, so the United States consumers will suffer from larger tax increases than their European counterparts. But some European producers will also be harmed by reduced U.S. market access."
"On net, the Europeans have the advantage, since they at least can maintain free and open trade with other partners while the United States is busy destroying the gains from trade with all of our trading partners."
What Happens Next
It is unclear when the results of the ongoing investigation into pharmaceutical imports might be made public.
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