Pharmaceutical industry breathes a sigh of relief, but Europe remains alert as the US holds the threat of tariffs over key sectors.
The European Union and the United States have managed to avoid a full-blown trade conflict over pharmaceutical goods—at least for now.
This comes after months of tension sparked by a February proposal from former President Donald Trump. He had suggested that the US might place a 25% tariff on medicines and other health products imported from Europe.
On Friday, US officials confirmed that pharmaceuticals would be temporarily exempt from any new trade duties. Other sectors such as copper, semiconductors, energy, and lumber were also included in this short-term relief.
Despite the decision to hold off on new taxes, officials in Brussels remain cautious. The European Commission warns that this could be only a pause and that tariffs may still come later.
European Drug Exporters on Edge
Many EU countries have reason to worry. Ireland, Germany, Belgium, and Denmark all serve as major hubs for drug production and biotech research. American pharmaceutical giants such as Pfizer, Johnson & Johnson, AbbVie, Eli Lilly, and Bristol-Myers Squibb have large production centers in Europe.
Ireland is especially vulnerable. US companies have moved significant parts of their manufacturing there to benefit from the country’s low corporate tax rates. Today, the Irish pharmaceutical industry exports over €72 billion worth of goods to the US each year and supports around 45,000 jobs.
Belgium is another country that could suffer if tariffs were imposed. The country exported more than $73 billion in pharmaceutical products in the first ten months of 2024. About a quarter of that went to the American market. Pharmaceutical exports make up 15% of Belgium’s total trade.
David Gering of Belgium’s national pharmaceutical association said the US announcement brought short-term relief, but long-term risks remain. “Any sudden change in US trade rules could hit our industry hard,” he said.
EU’s Biggest Export Sector at Risk
Pharmaceutical products are the EU’s largest export category to the United States. In 2024, the value of pharmaceutical exports reached $127 billion (€117 billion). If these goods were to be taxed at higher rates, patients and companies in both regions would face serious disruptions.
EU leaders worry that the current exemption might be temporary. Officials believe the US could still target pharmaceutical goods as part of its strategy to bring key industries back to American soil.
In response, the European Commission is planning a roundtable meeting in Brussels next week. President Ursula von der Leyen will speak with leaders from Europe’s pharmaceutical industry to discuss next steps and prepare for any future US actions.
A senior EU official said, “We are not relaxing. We have seen before how quickly US trade policy can change. We must be ready.”
Trump-Era Tax Policies Still Affecting Trade
A key reason for the strong US–EU pharma link is an old tax policy. Back in 2017, under President Trump, a tax reform opened a loophole. This allowed American drug companies to move profits and production to low-tax nations like Ireland.
According to a US Senate Finance Committee report, companies like Pfizer and Johnson & Johnson used this loophole to pay fewer taxes in the United States. As a result, the EU became a vital part of the US supply chain.
Professor Billy Melo Araujo from Queen’s University Belfast explained, “Any trade action now could severely hurt places like Ireland, which became central to US drug production.”
While the current administration has not closed this loophole, trade experts think changes may come soon. This could either bring more production back to the US or spark deeper trade tensions.
Reshoring and Sector Watchlists
The US government has named five sectors it wants to bring back under national control: automobiles, metals, minerals, semiconductors, and pharmaceuticals.
Tariffs already affect US trade in steel, aluminum, and cars. Meanwhile, investigations are ongoing in the copper and lumber sectors. Pharmaceuticals and semiconductors are next in line, according to insiders.
Experts say this reflects Washington’s wider goal of reshoring—bringing vital industries back to American soil to cut foreign dependency.
Still, health experts warn against disrupting global medicine supply chains. Many lifesaving drugs depend on ingredients and processes split across multiple countries.
Brussels Calls for Unity
EU leaders are urging unity among member states and clear communication with American partners. Von der Leyen has called for “joint preparedness” and pledged to protect the interests of the EU’s health sector.
The Commission will work closely with national governments and industry leaders to monitor developments. Officials stressed that maintaining a steady drug supply must remain a shared goal.
As the global economy shifts and protectionism rises, leaders on both sides of the Atlantic hope they can avoid further escalation.
But with past tensions and economic strategies still shaping today’s choices, the risk of future conflict remains.