Not 100% but 15%: The White House states that Trump's drug tariffs do not apply to trade agreement partners such as Europe and Japan

The White House's statement has alleviated market concerns about the overall impact of drug tariffs.

According to CCTV News, on Friday, September 26, the U.S. White House stated that the latest tariff measures on drugs do not apply to countries that have trade agreements with the United States. CCTV cited media reports that White House officials indicated that for trade partners such as the European Union and Japan, the U.S. will continue to adhere to the 15% tariff cap stipulated in the agreements.

This means that for the European Union and Japan, what appears to be a 100% tariff will actually be implemented at only 15%.

After the news broke during midday trading on Friday in the Eastern U.S. time, the stock prices of European pharmaceutical giants listed in the U.S. mostly rose. Novartis (NVS) saw its intraday gains expand to over 1%, GlaxoSmithKline (GSK) rose more than 1% during the day, AstraZeneca (AZN) hit a new intraday high with gains exceeding 0.7%, and Roche, which had dropped over 1% in early trading, narrowed its decline to less than 0.1%.

According to CCTV, on September 25, local time, U.S. President Trump announced on his social media that starting October 1, the U.S. will implement a new round of high tariffs on various imported products. The measures include: imposing a 50% tariff on kitchen cabinets, bathroom sinks, and related building materials; a 30% tariff on imported furniture; and a 100% tariff on patented and branded drugs.

EU and Japan Tariffs Still Follow Existing Agreements

On Friday, multiple media outlets reported that White House officials stated that Trump's new drug tariff policy will not cover countries that have signed agreements with the U.S. containing drug provisions.

White House officials stated that under the terms of the framework agreement already reached, the tariff cap on drugs imported from the European Union is 15%. Japanese drugs will also be taxed according to the rates specified in their agreements. The U.S.-Japan joint statement stipulates that the U.S. tariff rates on Japanese drugs and semiconductors should not exceed the rates applicable to other countries, including EU member states.

The Trump administration has recently begun implementing the trade agreement with the EU, reducing the tariff rate on cars imported from the EU from 25% to 15%, with the new tariff adjustments retroactive to August 1.

According to CCTV News, the Trump administration issued a formal announcement on Wednesday, September 24, implementing the trade agreement reached between the U.S. and the EU, confirming that starting August 1, a 15% tariff will be imposed on EU-imported cars and automotive products.

EU and Japan Confident Tariffs Will Not Exceed Caps

According to media reports, both the European Union and Japan expressed confidence on Friday that the drugs exported to the U.S. will not exceed the agreed tariff caps.

The European Commission cited the joint statement released after the trade agreement reached with the U.S. at the end of July, which stipulates that tariffs on drugs, semiconductors, and wood will not exceed 15%.

An EU Commission spokesperson stated, "This clear 15% tariff cap provides a safety net for EU exports, ensuring that European economic operators will not face higher tariffs." EU Trade Commissioner Maros Sefcovic expressed his expectation that this commitment will be honored and pointed out that Washington has fulfilled its promise to reduce car tariffs Japan also cited its joint statement with the United States, which states that the U.S. tariff rates on Japanese semiconductors and pharmaceuticals will not exceed the applicable rates for other countries such as the European Union. A lobbyist from a large pharmaceutical company indicated that while Trump's threat of imposing a 100% tariff on imported branded drugs is concerning, the industry hopes that the 15% tariff agreed upon under the U.S.-EU trade agreement will apply.

Institutions Believe Tariff Impact is Minimal

An earlier Wall Street Journal article mentioned that investment banks like UBS told clients that the actual impact of the new tariff policy may be minimal, as large pharmaceutical companies have invested hundreds of billions of dollars in building production facilities in the U.S. UBS analyst Joe Dickinson stated that considering the massive investments committed by large pharmaceutical companies over the next five years, market expectations for the actual impact of a 100% product tariff may still be low.

Specific investment data shows that AstraZeneca has committed to invest $50 billion, Roche $50 billion, GlaxoSmithKline $30 billion, and Novartis $23 billion. Vontobel analyst Sibylle Bischofberger Frick pointed out that all large pharmaceutical companies have a presence in the U.S., and nearly all have announced large-scale investment plans for the coming years.

Mizuho Securities healthcare expert Jared Holz stated in a report that the statement is very direct, but its impact may range from vague to negligible.

Novartis CEO Mike Doustdar stated on Friday that it is still uncertain how the 100% tariff decision will align with the U.S.-EU trade agreement. Roche and Novartis indicated on Friday that they do not expect to be impacted by drug tariffs due to their ongoing construction of new factories in the U.S. and investments there