On 21 August 2025, the European Union and the United States
published a Joint Statement (JS) "on
a United States-European framework on an agreement on reciprocal,
fair and balanced trade" (see, attachment). As the
first part of its title indicates, the JS is the start of a process
which the parties say will over time cover additional areas and
"increase their trade and investment relationship".
Additionally, further measures, including rules of origin, still
have to be negotiated.
By contrast, whether the JS also ensures "reciprocal, fair,
and balanced trade" is debatable and explains the mixed
reactions which the JS has elicited.
The treatment of pharmaceuticals under the JS forms a perfect
illustration of this controversy:
- The importation of originating pharmaceuticals of the EU into the US will be subject to a tariff that does not exceed 15%.
- This ceiling will apply regardless of the outcome of a pending investigation in the US under Section 232 of the Trade Expansion Act to determine the effects on national security of imports of pharmaceuticals and related products, including precursor chemicals. Until the Section 232 inquiry terminates, the current US Most Favoured Nation (MFN) tariff applicable to pharmaceuticals will continue to be valid.
- Effective as of 1 September 2025, the US will apply an undisclosed MFN tariff to generic pharmaceutical products and their ingredients and chemical precursors. According to a European Commission's Questions and Answers document, that specific tariff will be "zero or close to zero".
- The importation of US pharmaceuticals into the EU will continue to be duty-free. This is because since 1994, pharmaceuticals have generally been exempt from tariffs under the World Trade Organization's Agreement on Trade in Pharmaceutical Products, in which the EU, Japan, the US, and several other economies participate.
Many European industry executives expressed relief at the
prospect that the importation of medicines into the US would be
made subject to what is regarded as a "modest" tariff.
Additionally, and as the European Commission pointed out, the new regime brings the
highly-desired certainty to EU exporters.
However, in a statement, the European Federation of
Pharmaceutical Industries and Associations
(EFPIA) exhibited disappointment and a
fear that the certainty coveted by the industry may be illusory.
While it acknowledged that from the EU's perspective the JS may
at present be the best possible deal, EFPIA decried the absence of
"a clear path for exemptions for innovative medicines and no
visibility on future trade and pricing policies". EFPIA thus
implicitly contrasted the treatment of innovative pharmaceuticals
with the duty-free status of imported generic medicines. Perhaps
more importantly, its statement can also be seen as a renewed
warning against the adverse effects of the Executive Order of 12 May 2025 in which the US
President directed pharmaceutical companies to bring US
pharmaceutical prices in line with prices prevailing in
"comparably developed nations". This "Most-Favoured
Nation Pricing" is not only antithetical with tariffs imposed
on imported medicines but also threatens price increases and
delayed product launches in Europe. Against this backdrop,
EFPIA's call for a continued transatlantic dialogue reflects an
absolute necessity.
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