The EU's Fierce Contest with the US: A Looming Battle Over Pharmaceutical Tariffs
US Initiates Initial Move Toward Imposing Tariffs on Pharmaceutical Imports from Europe
In a heated exchange, the European Commission has expressed its discontent with the US investigation into pharmaceutical tariffs, fearing that these tariffs could jeopardize both American and European healthcare systems.
Recently, the Trump administration initiated a probe under Section 232 of the Trade Expansion Act of 1962, a step that allows tariffs on imports deemed harmful to national security. The investigation has sparked concern as it could potentially lead to trade action.
Elena Kamilarova, a trade official at the European Commission,ň criticized this investigation, stating that looking at pharmaceutical imports as national security risks is deeply flawed.ň She emphasized during an event in Brussels that neither the tool nor the concept of it is justified.
Pharmaceutical companies, both EU and US-based, have voiced their concerns, fearing rising drug prices and supply chain disruptions. Particularly at risk are countries that serve as major manufacturing hubs, such as Ireland, Germany, Belgium, and Denmark, which are key exporters of pharmaceuticals to the US.
Should these tariffs be implemented, it could potentially disrupt the exchange of medicines, with severe consequences for both patients and businesses. In 2024, pharmaceuticals accounted for the largest EU export to the US, valued at €117 billion.
Thibaut L'Ortye from the American Chamber of Commerce in the EU expressed concern about the probe, pointing out its lack of US business support and the potential strain it could impose on the already fragile transatlantic trade relationship.
However, pharma could offer a rare point of alignment between the US and EU, with both sides recognizing the need to address supply chain vulnerabilities. According to L'Ortye, efforts to secure critical medicines are underway on both continents.
A report commissioned by the industry's US trade group predicts that a 25% tariff on pharmaceutical imports would result in an annual increase of $51 billion in US drug costs, with potential consumer price increases of up to 12.9%. The US imported $203 billion in pharmaceutical products in 2023, with 73% originating from the EU, making this sector critically vulnerable to tariffs.
European generic companies play a significant role in addressing shortages in the US, contributing to American healthcare provision. The US relies on European suppliers for crucial active pharmaceutical ingredients (APIs), though it also sources APIs from China, India, and other regions.
On the horizon, the imposition of pharmaceutical tariffs raises questions about access to critical medications, potential shortages, and increased healthcare costs on both continents.
(- pharma, EU Policy, European Commission, tariffs, United States)
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- The European Commission has issued a warning against potential pharmaceutical tariffs, expressing concerns about their significant impact on both American and European healthcare systems.
- In response to the US investigation into pharmaceutical tariffs, Elena Kamilarova, a trade official at the European Commission, criticized the use of Section 232 of the Trade Expansion Act of 1962, citing its lack of justification.
- Thibaut L'Ortye from the American Chamber of Commerce in the EU highlighted the lack of US business support for the probe on pharmaceutical tariffs, raising concerns about the potential strain it could impose on the transatlantic trade relationship.
