The world's holding its breath as President Donald Trump prepares his next round of market-moving decisions, after he signalled plans to impose 25% tariffs on cars and other key sectors as early as 2 April.
Speaking from the Oval Office on Wednesday night, Trump confirmed that pharmaceuticals are among industries in his sights, making explicit his goal of bringing drug manufacturing back to the United States.
“We’re going to be doing tariffs on pharmaceuticals to bring our pharmaceuticals back,” he said.
While Trump’s tariffs are designed to support domestic industries, create jobs, and reduce reliance on foreign supply chains, their impact on the pharmaceutical sector could be far more complex.
Instead of benefiting US production, tariffs could drive up drug prices and create unintended consequences for both American and European pharmaceutical companies.
For the EU, the effects could be just as severe, with supply chain disruptions and possible retaliatory measures against US pharma firms operating in Europe.
One thing is certain: a trade war in the pharmaceutical sector would be costly for both sides.
Here are six things to know about what US tariffs could mean for the EU pharma sector.
The US and EU both stand to lose
A trade war in the pharmaceutical sector would mean reduced access to key American medicines for European patients, potentially leading to higher healthcare costs.
However, the US also relies heavily on European pharmaceutical imports, particularly high-value, specialised medications. Tariffs could result in increased drug prices, supply chain instability, and financial strain on healthcare providers.
In 2023, the US became the world’s largest pharmaceutical importer, bringing in $170 billion (€157 billion) worth of products.
Washington sources around 80% of its active pharmaceutical ingredients (APIs) from China, India, and the EU. In 2024, pharmaceuticals were the top US import from the EU, including $127 billion (€117 billion) worth of semaglutide, a key component in popular weight-loss medications.
Ireland faces the hardest hit
Ireland stands to be among the most affected countries if tariffs are imposed. When meeting with Taoiseach Micheál Martin earlier this month, Trump remarked on the extent of US pharmaceutical operations in Ireland.
“All of a sudden, Ireland has our pharmaceutical companies. This beautiful island of five million people has got the entire US pharmaceutical industry in its grasp,” he said.
In 2023, Ireland exported over €80 billion worth of pharmaceuticals to the US, making up more than 50% of the country’s total exports.
Major US companies such as Pfizer, Johnson & Johnson, Eli Lilly, Bristol-Myers Squibb, and AbbVie have significant manufacturing operations in Ireland. For example, Pfizer produces a large portion of its COVID-19 vaccine there.
If tariffs are introduced, US drug costs could rise while Ireland faces job losses as companies may be forced to relocate manufacturing elsewhere.
But given Ireland’s heavy dependence on the pharmaceutical industry for its national GDP, the economic fallout could be severe and go much further than job losses.
The Novo Nordisk factor
Denmark’s pharmaceutical sector, particularly its crown jewel Novo Nordisk, is also highly exposed to US tariffs.
The company, a global leader in diabetes and obesity treatments, generates over 50% of its sales in the US, a market with a high diabetes prevalence.
If tariffs drive up the cost of Novo Nordisk’s drugs in the US, it could severely impact American patients, much as previous insulin price spikes have.
Reduced sales could also hurt Novo Nordisk’s stock value and put pressure on Denmark’s economy, which relies heavily on pharmaceutical exports.
The success of Novo Nordisk’s blockbuster weight-loss drugs like Ozempic and Wegovy has fueled Denmark’s economic growth, contributing nearly half of its GDP increase in 2023.
Any disruption could also open the door for US competitor Eli Lilly, which is expanding into the GLP-1 weight loss drug market.
No European pharma giant is spared
While Ireland and Denmark may be the most affected, other European pharmaceutical hubs will also feel the impact.
Belgium, home to US Pfizer’s major European production facilities, exported over $73 billion in pharmaceuticals in the first 10 months of 2024, with 25% going to the US. The industry accounts for 15% of Belgium’s total exports.
Germany, a key exporter of pharmaceuticals and biotech products, would also face setbacks, with major firms like Bayer, BioNTech, and Merck at risk. France, dominated by Sanofi, is a major exporter of vaccines, insulin, and prescription drugs, while Italy’s strong generics and API manufacturing base could see a loss of competitiveness too.
Switzerland, though not an EU member, is deeply integrated into the European pharmaceutical industry. Companies like Roche and Novartis export high-value specialty drugs and biologics, making them vulnerable to supply chain disruptions.
The EU can hit back
If the US imposes tariffs on European pharmaceuticals, the EU may respond with countermeasures targeting American pharma companies.
The European Commission is reportedly considering options in its "well calibrated and timely response", and this could include higher export costs for major US firms such as Pfizer, Merck, and Johnson & Johnson.
Retaliatory measures could affect US drugs like MSD’s cancer treatment Keytruda and Eli Lilly’s injectable diabetes medicine Trulicity.
Increased costs for European healthcare systems could push EU buyers toward generics from domestic producers or third-party suppliers.
Additionally, the EU could prioritise European pharmaceutical companies for large-scale government contracts, potentially sidelining American firms.
The recent Critical Medicines Act, proposed by the European Commission, suggests introducing a “Buy European” principle for essential medicines.
This could reignite the EU’s pharma legislation debate
The introduction of US tariffs could also reignite discussions around the EU’s stalled General pharmaceutical legislation (GPL) reform, which has been in limbo since its proposal in 2023.
A key provision in the GPL would cut regulatory data protection periods, a move that has already sparked industry concerns about Europe’s competitiveness. Combined with new trade barriers, these changes could push pharmaceutical R&D investment elsewhere.
With GPL negotiations ongoing, the industry may use the threat of US tariffs as an opportunity to reshape the conversation, emphasising how geopolitical shifts are endangering Europe’s pharmaceutical sector.
The Critical Medicines Act, another proposal just put forward by the Commission, is already preparing potential responses to strengthen EU pharmaceutical sovereignty.
