EU Expects Exemption from Trump's Generic Drug Tariffs

BRUSSELS — The European Commission said Wednesday that it expects European generic medicines to be exempt from U.S. President Donald Trump’s latest tariffs, arguing that Washington committed to a zero tariff rate with last year’s transatlantic trade deal.

Trump on Tuesday announced a plan to impose a 100 percent tariff on generic drugs starting in August 2028 as part of a bid to bring pharmaceutical production back to the United States. If implemented, the tariff would then jump to 200 percent in 2029, the president said in a social media post.

But under the 2025 trade deal struck in Turnberry, Scotland, the U.S. promised to exempt European generic drugs from higher levies. The pact foresees that exports of EU generic pharmaceuticals would only be subjected to the U.S. most-favored-nation tariff rate, a rate imposed on all U.S. partners, effectively 0 percent.

Under the joint statement, “the United States committed to exempting generic medicines from the 15% tariffs; therefore MFN [most-favored-nation] treatment continues to apply, corresponding to a 0% tariff rate,” said the European Commission deputy chief spokesperson Olof Gill. He added that EU innovative drugs continue to be subject to a 15 percent tariff.

“This clearly shows that the EU–U.S. Joint Statement is delivering by preserving stability and predictability, and protecting a key strategic sector from disruption and tariff increases,” Gill stressed. The deal as such is not legally binding, but any breach of its terms would likely unleash tit-for-tat tariff retaliation.

Trump’s latest threat comes as his administration is scrambling to rebuild its tariff wall after a legal setback earlier this year, with its temporary 10 percent tariffs due to lapse Friday. Although Washington insisted that the new probes would not breach the 15 percent threshold enshrined by the transatlantic deal, the EU is still bracing for more investigations, targeting forced labor, excess capacity in the manufacturing sector and possibly also digital services tax.

Drug shortage risks

The EU generics lobby, Medicines for Europe, said the measures risked triggering “significant medicine shortages across the United States”. Off-patent drugs from Europe “should remain exempt from tariffs under all circumstances” under the Turnberry agreement, the trade group said.

Swiss generics manufacturer Sandoz said Wednesday morning it was “too early to assess the potential implications, as further details on the implementation and scope of the measure are still required.” A Sandoz spokesperson added the company would continue dialogue with policymakers on how to improve affordability and access to medicines in the U.S.

Threats to generic medicines increase pressure on the pharmaceutical sector, after the Trump administration threatened new levies on Germany over its drug pricing policies.

Washington alleges that Berlin’s laws result in the U.S. paying a disproportionate share of research and development costs for innovative drugs. U.S. Trade Representative Jamieson Greer said last week that he was also in talks with France over its pricing practices.

“The pharmaceutical sector is critically important on both sides of the Atlantic, with highly integrated supply chains, strong investment and research ties, and broadly balanced trade flows. Preserving these links is essential both for patient access and for sustaining innovation,” added Gill, the Commission spokesperson.