Irish pharma still risks wildcard Section 232 tariffs, despite Trump's trade agreement

Euractiv

5 days ago

Dublin - Ireland's multibillion-euro pharmaceutical industry is still in a precarious position despite this week's US-EU trade deal. The Trump administration's new 15% tariffs haven't settled market nerves, with a sweeping Section 232 national security investigation in play, and official assurances viewed cautiously.
Under this week's US-EU trade framework, a 15 per cent tariff will apply to a wide range of European goods entering the US. While both US and EU officials say most pharmaceuticals will attract the 15% tariff, this remains to be seen pending the outcome of the ongoing Section 232 inquiry, which could trigger even steeper duties.
With over €58bn of Ireland's €72.6bn in US exports last year stemming from pharmaceuticals, the risk is significant. The industry underpins nearly 50,000 jobs and is central to Ireland's foreign direct investment model.
Speaking after the framework was unveiled, Tánaiste Simon Harris said: 'Whilst the agreement between the EU and the US is welcome, we know that the imposition of any tariffs will have implications and that now is the time to intensify efforts to find and secure more markets for Irish businesses and Irish jobs.'
Despite assurances from Brussels, uncertainty prevails in Dublin. One senior cabinet minister, speaking on condition of anonymity, told the Irish Independent: 'We're still in the dark about elements of it… Pharma and semiconductors is where a lot of this will rest and there's still an open question about where they'll end up.'
Danny McCoy, CEO of Irish business group Ibec, said the trade agreement 'brings an end to a significant amount of uncertainty for some businesses. However, a 15% tariff still represents a substantial burden for many industries.'
He added: 'Pharmaceuticals and semiconductors, which equate to 75% of Ireland-US trade, are, we understand, included in the 15% deal. However, there is still a question around the stability of that rate over both the short and long-term in the face of ongoing Section 232 investigations.' 'Tax scam' rhetoric remains
While the European Commission insists pharmaceuticals will not face tariffs above the 15 per cent threshold, citing a 'very clear political commitment' from President Trump, the White House has continued to signal its intent to reconfigure pharmaceutical supply chains.
A significant part of this uncertainty stems from previous comments by Commerce Secretary Howard Lutnick, who notoriously described Ireland as his favourite 'tax scam', indicating political appetite for deep sector-specific trade actions.
With Ireland still potentially in Trump and Lutnick's sights, Ireland's pharma business group, the IPHA, declined to comment on the trade deal and 15% tariff rate.
However, it's understood that the IPHA are aligned with the EFPIA, the European Federation of Pharmaceutical Industries and Associations , which represents the interests of companies such as Pfizer, Roche, and Sanofi.
EFPIA has warned against US trade measures, saying, 'Tariffs on medicines are a blunt instrument that will disrupt supply chains, impact on investment in research and development, and ultimately harm patient access to medicines on both sides of the Atlantic.'
'If the intent is to secure pharmaceutical investment in research, development and manufacturing, rebalance trade and ensure a fairer distribution of how global pharmaceutical innovation is financed, then there are more effective means than tariffs that would help, rather than hinder, global advances in patient care and economic growth.' The Section 232 wildcard
Since returning to the White House, President Trump has launched 13 Section 232 national security investigations. Four have resulted in tariffs - including steel, aluminium, autos, and most recently copper.
A decision on pharmaceuticals is required by late December 2025, within the statutory 270-day window from the investigation's launch in April. However, it is thought likely that the investigation team will report within the next three weeks.
A White House official told Euractiv on 28 July: 'When the pharma Section 232 tariffs take effect, the EU will only be subject to 15%.'
The following day, the administration published a fact sheet stating: 'As part of President Trump's strategy to establish balanced trade, the European Union will pay the United States a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors.'
It's been a long week, and the legal ground remains unsettled. Tariff 'stacking' risk
Law firm Covington has warned: 'While initial guidance from the Trump administration provided that Section 232 tariffs would not apply simultaneously (or 'stack') on top of certain other types of tariffs … recent changes to these rules have rendered the stacking question more complex.'
'As additional Section 232 tariffs are announced, further changes to the applicable tariff stacking rules are likely.'
President Trump's prior use of Section 232 saw duties of 25 per cent on steel and 10 per cent on aluminium, later raised to 50 per cent.
In April, he reiterated his intent to target offshore pharmaceutical production, stating: 'We don't make our own drugs […] anymore. The drug companies are in Ireland, in lots of other places – China – and all I have to do is impose a tariff. The more, the faster they move here.'
As with Secretary Lutnick's 'tax scam' remarks, there is no indication that President Trump has softened his stance in any way.
The EU trade deal requires $600 billion in investments from Europe, over President Trump's term, part of which will be from the pharmaceutical sector. The White House keeps a public list of inward investment 'wins', and the clock is ticking for pharma to reshore. Trade impact and economic risks
The US, which imports over 70 per cent of its essential medicines, could face severe domestic consequences. Generics and hospital injectables - accounting for 90 per cent of prescriptions - are particularly exposed.
Medicines for Europe, which represents generic drugmakers, warned that tariffs 'would likely exacerbate the existing shortages in the U.S. and would most likely contribute to a huge wave of additional shortages, including for most products in the essential medicines list.'
Reuters reports that analysts at ING estimate that a 15 per cent tariff on pharmaceuticals could slash Irish pharma exports to the US by €8.7bn annually, assuming standard price elasticity and no rapid substitution.
EU-wide losses could range from €18bn to €22bn, depending on the final scope and duration of tariffs and other trade measures.
Analysts estimate that a 15 per cent tariff could increase US drug prices by 5 - 10 per cent, adding up to $30bn annually to healthcare costs - particularly burdening hospitals and lower-income patients.
Increasing healthcare costs ahead of mid-term elections and pushing inflation still higher is a high-risk strategy for the White House. Market response
Despite the looming threat, equity markets have responded with cautious optimism. Following the deal's announcement, investors seem to believe that mitigation strategies may buffer the blow.
Companies are already anticipating the changes. Sanofi recently sold a New Jersey facility to Thermo Fisher to maintain domestic production. Roche is increasing US inventories, while others are locking in new contract manufacturing agreements. The road ahead
In Ireland, the government is convening a national Trade Forum tomorrow, Friday, to assess the fallout. Tánaiste Harris described it as '... a timely opportunity to share and gain insights on what this deal will mean for the future of Irish businesses, jobs, and the economy.'
Irish industry leaders continue to call for restraint and clarity, warning that missteps in the coming months could have long-term implications not just for European drug exports, but for American patients and hospitals as well. By Brian Maguire