Pharma left in limbo as Section 232 probe drags on

Euractiv

2 days ago

While the 15% US tariffs are set to impact most European sectors from 7 August, the EU pharma industry seems to be exempt – at least until the ongoing so-called "Section 232" investigation is concluded. This could prolong the period of uncertainty well into next year.
What effect do pharmaceutical imports have on national security? That is the question the US secretary of commerce has been examining since 1 April, following President Trump's decision to initiate an investigation using a tool dating back to 1962.
The probe covers all pharmaceuticals and their components – including finished drug products, medical countermeasures, active pharmaceutical ingredients (APIs), key starting materials, and related derivatives. The US Department of Commerce is particularly seeking input on domestic capacity, foreign supply risks, and unfair trade practices.
If the investigation concludes that such imports pose a risk or are contrary to US interests, Trump could decide to impose tariffs or quotas on the affected products.
During his first term, he already used Section 232 to introduce sector-specific duties – a 25% tariffs on steel and 10% on aluminium imports imposed in 2018.
The pharma investigation is one of several probes still ongoing, including those into lumber, semiconductors, critical minerals, and commercial aircraft – underscoring the perceived importance of the pharma sector. Europe's pill power in the US Currently, 80% of generic drugs and one in two branded medicines used in the US are imported. Pharmaceuticals are the highest-value EU exports to the US, with the EU supplying around 60% of all pharmaceutical imports into the States.
Ireland is the top supplier by value, with over €58 billion of its €72.6 billion in US exports last year coming from pharmaceuticals. Meanwhile, 88% of APIs are sourced from outside the US, with the EU providing around 20% – second only to India.
Since the WTO's 1994 Agreement on Trade in Pharmaceutical Products, which both the US and the EU signed, many pharmaceutical products and the substances used to produce them have been traded at duty-free levels.
In Trump's view, imposing tariffs would strengthen the domestic pharma industry and reduce reliance on Europe. I n the short term, however, it would likely push up prices – undermining his aggressive push for lower prices and his Most Favoured Nation (MFN) policy.
Nonetheless, the US president recently announced that pharmaceuticals would not be exempt from the 15% tariffs and even suggested that the duties could rise as high as 200% – after giving drugmakers about a year to bring manufacturing back to the US.
That timeline doesn't quite align with the Section 232 investigation. The statute gives the secretary of commerce 270 days to complete the review, meaning the report could be ready any time before Christmas. The US administration has indicated, however, that it intends to accelerate the process.
The president then has an additional 90 days to decide on any action, which he may not end up using, since he could issue a decision once the investigation's findings are released.
(bms, aw, cs)