US President Donald Trump has imposed a 100% tariff on branded drug imports to the US, targeting the EU as the main supplier of patented medicines.
The measure aims to incentivize pharmaceutical companies to shift production to the US, with exemptions for companies building new facilities. The measure is expected to significantly impact European countries like Germany and Switzerland, while generic medicines from India remain unaffected. Trump has long argued that tariffs can address trade imbalances and prevent other countries from taking advantage of the US economy. However, critics highlight that such policies may raise domestic prices and harm the broader economy.
Major firms, including Merck & Co., AstraZeneca, Roche, Novartis, and Johnson & Johnson, have since announced billions in new US manufacturing projects. At the same time, 32 pharmaceutical companies sent a joint letter to European Commission President Ursula von der Leyen, warning that Trump’s tariffs could shift more than €100 billion ($117 billion) in investment out of Europe over the next few years. The CEOs urged Brussels to overhaul pricing rules, strengthen patent protections, and streamline regulation to keep the continent competitive.
Trump’s move comes as he has been overhauling US trade policy since returning to office, imposing sweeping tariffs on key trading partners to protect domestic industry. The US president has long argued that tariffs fix unfair trade deficits and stop other countries from ‘ripping off’ the US. Critics say the policy raises domestic prices and hurts the economy. The measure is expected to hit Europe hardest as it is the dominant supplier of branded drugs to the US, led by Ireland, Germany, Switzerland, and Belgium. Generic medicines, which are mainly imported from India, are exempt from the levy.
In April, Trump labelled the EU ‘nastier than China’ regarding trade practices. He claimed that the bloc is at least partly to blame for the excessively high prices that Americans pay for prescription drugs. According to the president, Brussels has been unfairly exerting ‘brutal’ pressure on pharmaceutical companies to keep prices low in Europe, while refusing to shoulder the fair share of firms’ research and development and other related costs. He fell short, however, of imposing tariffs on pharmaceuticals at the time.
The pharmaceutical industry is also concerned, with major firms like Merck & Co., AstraZeneca, Roche, Novartis, and Johnson & Johnson investing billions in US manufacturing projects. Meanwhile, European companies have warned that the tariffs could lead to a significant outflow of investment over the next few years, urging Brussels to adjust pricing rules and strengthen patent protections.