The Government has said a deal capping future US tariffs on imports of pharmaceuticals from Europe still stands, despite president Donald Trump’s overnight threats of much higher trade levies targeting the industry.
Mr Trump announced plans to hit pharmaceuticals with a 100 per cent import tax from October 1st, unless a company is building a pharma manufacturing plant in America.
Officials in Brussels and Dublin are scrambling to understand where the threat leaves a EU-US tariff deal agreed earlier this year, which included key clauses that any coming US tariffs on pharma imports would not exceed a 15 per cent cap.
In a post on his Truth Social platform, Mr Trump dropped his latest tariff bombshell, stating the White House would be introducing huge import levies on pharmaceutical products.
“Starting October 1st, 2025, we will be imposing a 100 per cent tariff on any branded or patented pharmaceutical product, unless a company IS BUILDING their pharmaceutical manufacturing plant in America,” Mr Trump wrote. “There will, therefore, be no tariff on these pharmaceutical products if construction has started,” he said.
In a statement, Tánaiste and Minister for Foreign Affairs and Trade Simon Harris stressed the transatlantic deal on tariffs remained in place.
“We will be studying the impact of this announcement, which includes a number of exemptions, together with EU colleagues,” he said.
The EU-US deal agreed by Mr Trump and European Commission president Ursula von der Leyen was “absolutely clear” that any US tariffs on pharma imports would be limited to 15 per cent, Mr Harris said.
“This remains the case and underlines again the value of the agreement,” he said.
The tariff deal saw the EU agree to suck up across-the-board tariffs on future trade with the US, in a bid to avert what many feared could have escalated into a full blown trade war between the two long-standing economic partners.
Ireland is the most exposed state in the EU to any US tariffs on the pharma sector.
US pharma giants Pfizer, Eli Lilly, MSD and others have large manufacturing plants in the Republic, producing drugs to ship back across the Atlantic. The industry accounts for a huge portion of the the State’s exports and trade with the US, and is an important contributor of corporation tax.
Mr Trump’s announcement was one of several about new industry-focused tariffs set to begin next Wednesday.
Imported heavy trucks will be subject to a 25 per cent duty, kitchen cabinets and bathroom vanities will be hit with a 50 per cent charge, and upholstered furniture imports are to be taxed at 30 per cent.
Taken together with the pharma announcement, the moves amount to a rapid expansion of Mr Trump’s tariff regime, which he started to erect shortly after taking office. It comes at a time when the president has flexed his executive powers like none of his modern predecessors.
[ World economy yet to feel full force of tariffsOpens in new window ]
Mr Harris met United States secretary of commerce Howard Lutnick in Washington DC on Thursday to discuss the economic, trade and investment relationship between Ireland and the US.
They discussed the potential of expanding the list of goods that are exempt from the baseline 15 per cent tariff rate. A spokesman for the Department of Foreign Affairs said Ireland has a particular interest in this as it relates to the spirits and medtech sectors.
They also discussed the issue of non-tariff barriers as well as the ongoing Section 232 investigations on pharmaceuticals and semiconductors.
They exchanged views on the impact of the expansion of the section 232 measures on certain steel and aluminium given the impact of these on a number of Irish manufacturers, particularly in the agri-tech sector.
The Trump administration’s trade deals with Japan, the EU and the United Kingdom include provisions that cap tariffs for specific products such as autos, semiconductors and pharmaceuticals, which means the new higher national security tariffs likely will not raise them above agreed rates.
Under a trade deal agreed with Japan, “treatment of specific or compound duty rates shall be identical to the treatment provided to products of the European Union”, according to a statement released by the White House in early September.
Asian stocks fell on news of the tariffs. The MSCI Asia Pacific Index declined 0.5 per cent after the S&P 500 dropped for a third session, the longest slide in a month. Asian pharmaceutical stocks slumped.
“Trump is never going to be done with tariffs,” Deborah Elms, head of trade policy at Hinrich Foundation, said on Bloomberg Television. “This is an incredible breathtaking expansion of tariff coverage that will affect everyone including those countries that thought that they have a deal in place under those reciprocal tariffs that are not covered by these sector-specific new applications.”
The posts offered no further details. The pharmaceuticals plan, as described by the president, could allow for wide exemptions for companies with presences in the US. The White House did not immediately respond to a request for more specifics.
[ US tariffs to have moderate impact on Irish economyOpens in new window ]
The levy on branded pharmaceuticals could raise the average US tariff rate by up to 3.3 percentage points, according to Bloomberg Economics, though the impact may be offset by the exemption for companies building local manufacturing facilities. Singapore and Switzerland are the countries most exposed to the move.
Major drugmakers, including Merck, AstraZeneca and Johnson & Johnson, have announced billions of dollars in planned US manufacturing investments in the months since Mr Trump’s inauguration, following the president’s repeated threats to impose levies on drugs imported from overseas.
“The actual comment from the president is direct but its impact may be somewhere between nebulous and negligible,” Mizuho Securities healthcare specialist Jared Holz said in a note. “All major players have some production presence domestically and almost all have announced increased investment directly tied towards local manufacturing.”
Still, some could be left vulnerable. Multinational drugmakers have said they primarily rely on plants in the US to supply the domestic market, but not all of them have broken ground on their promised expansions.
“The countries most exposed to the move are Singapore and Switzerland. The UK also has some important pharmaceuticals exports to the US – its trade agreement with the US mentioned that special rates would be considered in the event of new Section 232 tariff, but no formal rate was agreed. A similar approach seems also to be in place for Japan.”
Johnson & Johnson’s immune-disease therapy Stelara and cancer drug Darzalex are manufactured in Switzerland and Denmark, respectively. Opdivo, Bristol-Myers Squibb Co’ blockbuster cancer immunotherapy, relies heavily on production in Ireland and Switzerland. Novartis AG’s Cosentyx and Entresto also originate in Swiss facilities.
Unless those companies can show they have broken ground on US sites that will take on production, their biggest sellers could face tariffs that would instantly double import costs. Novo Nordisk, for example, is building a new 1.4 million square foot manufacturing plant in North Carolina, while Eli Lilly earlier this year announced plans for four new US manufacturing sites. – Additional reporting Bloomberg