Under the joint statement, “the United States committed to exempting generic drugs from 15% tariffs; therefore MFN (most favored nation) treatment continues to apply, corresponding to a tariff rate of 0%,” European Commission deputy chief spokesman Olof Gill said. He added that the EU’s innovative medicines continue to be taxed at 15 percent.
“This clearly shows that the EU-US Joint Statement provides for preserving stability and predictability, and protecting an important strategic sector from disruption and tariff increases,” Gill emphasized. Such an agreement is not legally binding, but any violation of its terms may result in tit-for-tat tax retaliation.
Trump’s latest threat comes as his administration struggles to rebuild its tariff wall after a legal recourse earlier this year, with its temporary 10 percent tax due to expire on Friday. Although Washington insisted that the new investigation would not breach the 15 percent threshold set by the transatlantic agreement, the EU is still preparing for further investigations, targeting forced labour, overcapacity in the manufacturing sector and possibly also a tax on digital services.
Risks of drug shortages
The EU’s generic medicine lobby, Medicines for Europe, said the measures risked causing “a serious shortage of medicines in the US”. Off-patent medicines from Europe “should remain duty-free under all circumstances” under the Turnberry agreement, the trade group said.
Swiss genetics manufacturer Sandoz said Wednesday morning it was “too early to assess the potential impact, as more information on the implementation and scope of action is still needed.” A Sandoz spokesperson added that the company will continue to talk with policymakers about how to improve the affordability and availability of drugs in the United States.
Threats to generic drugs increase pressure on the pharmaceutical industry, after the Trump administration threatened new tariffs on Germany over its drug pricing policies.
Washington he demands that the Berlin rules cause the United States to pay a disproportionate share of the costs of research and development of innovative drugs. US Trade Representative Jamieson Greer said last week that He was also in talks with France on its pricing practices.
“The pharmaceutical industry is very important on both sides of the Atlantic, with highly integrated supply chains, large investment and research relationships, and balanced trade flows. Preserving these links is important for patient access and for promoting innovation,” added Gill, the Commission’s spokesperson.
