Facing the threat of 25% tariffs on pharmaceutical exports to the US, European companies are taking steps to mitigate the potential impact. Will the Trump administration's trade policies violate WTO rules?
Europe's pharmaceutical industry is bracing for potential repercussions from U.S. import tariffs, with some companies forming dedicated task forces to navigate the uncertainty. President Donald Trump's recent indication that the European Union could be next to face sweeping 25% tariffs on pharmaceuticals follows his earlier pledge to impose similar charges on drug imports.
This move has raised concerns among analysts, who warn that such levies could violate the rules set by the World Trade Organization (WTO). One prominent pharmaceutical company, has established its first-ever tariff taskforce to manage the uncertainty surrounding President Trump's proposed trade charges. The company anticipates that some of its production will be directly impacted. Helen Giza, the CEO, emphasized the swift and escalating nature of these developments, stating that the taskforce was assembled quickly to address the situation.The potential tariffs on European pharmaceutical exports to the U.S. mirror similar threats directed at Canada and Mexico. Last week, President Trump hinted at the possibility of imposing a flat 25% charge on all imports of pharmaceuticals, automobiles, and computer chips. This suggestion has sparked anxiety among some analysts who believe that such duties on the pharmaceutical industry would constitute a breach of WTO rules. According to the WTO's 1994 Pharma Agreement, a majority of pharmaceutical products and the substances used in their production are exempt from tariffs, ensuring duty-free access. However, Diederik Stadig, a sector economist at ING, suggests that this provision might not be sufficient to shield the industry from the White House's ambitions. Despite the WTO's rules, Stadig believes that the Trump administration may not be deterred by potential infringements. Soren Lontoft, a pharma equity analyst at Sydbank, echoes this sentiment, stating that the Trump administration appears unconcerned about such implications. The White House and the WTO Secretariat declined to comment on the potential trade infringements
Pharmaceuticals Tariffs Trade War WTO European Union US Trump Administration
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