US-EU Trade Deal Caps Pharmaceutical Tariffs at 15%, Averting Higher Levies

• The US has agreed to cap tariffs on EU pharmaceutical imports at 15%, avoiding previously threatened rates of up to 250%, with generic medicines and their ingredients receiving most favoured nation treatment from 1 September 2025.
• The agreement affects an estimated €120 billion in annual EU pharmaceutical exports to the US, with the 15% tariff representing approximately €18 billion in additional costs for the European pharmaceutical industry.

The United States and European Union have finalised details of their trade framework agreement, confirming that pharmaceutical tariffs will be capped at 15% and providing relief to an industry worth €120 billion in annual exports from the EU to the US.

According to the Joint Statement on a United States-European Union framework published by the European Commission on 21 August 2025, the US “commits to apply the higher of either the US Most Favored Nation (MFN) tariff rate or a tariff rate of 15%, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union.” The agreement specifies that tariffs on pharmaceuticals, semiconductors, and lumber subject to Section 232 actions will not exceed 15%.

The pharmaceutical provisions include preferential treatment for generic medicines. From 1 September 2025, the US will apply only MFN tariffs to “generic pharmaceuticals and their ingredients and chemical precursors” from the EU, which according to EU documentation are “effectively zero or close to zero.” This represents a significant concession within the broader tariff framework.

Industry reaction has been measured, with concerns remaining about the economic impact despite averting more punitive rates. Nathalie Moll, director general of the European Federation of Pharmaceutical Industries and Associations (EFPIA), stated: “With a potential 15% US tariff on pharmaceuticals, no clear path for exemptions for innovative medicines, and no visibility on future trade and pricing policies, we remain concerned for the future of patients and our sector in Europe.” The EFPIA estimates the cost of 15% tariffs on pharma exports to the US at approximately €18 billion, based on current trade volumes.

The agreement addresses previous uncertainty around Section 232 investigations, which the Trump administration launched in April 2025 to examine pharmaceutical imports’ impact on national security. Earlier threats of tariffs reaching 250% on pharmaceuticals had created significant concern within the European pharmaceutical sector about supply chain disruption and reduced R&D investment.

For contract manufacturing organisations (CDMOs) and pharmaceutical manufacturers with EU operations, the tariff structure creates cost pressures whilst maintaining market access. European Commission President Ursula von der Leyen described the outcome as delivering “for our member states and industry, and restored clarity and coherence to transatlantic trade,” though acknowledging this represents “a first step in a process that can be further expanded over time.”

The trade framework, which builds upon the initial agreement announced in July 2025, includes broader commitments from the EU, including the elimination of tariffs on all US industrial goods and energy procurement commitments worth $750 billion through 2028. The pharmaceutical provisions take effect from 1 September 2025, providing immediate clarity for companies planning 2025-2026 manufacturing and supply chain strategies.

Ireland, as one of the top sources of pharmaceutical imports to the US, welcomed the agreement through Prime Minister Micheál Martin, who noted that “given the scale of the pharmaceutical and semiconductor sectors in Ireland, it is important that the Joint Statement confirms that 15% is a ceiling” for those tariffs.