EU, Japan trust they have secured limits to US drug tariffs

By Philip Blenkinsop

BRUSSELS (Reuters) -The European Union and Japan expressed confidence on Friday that they had secured limits on U.S. tariffs on pharmaceuticals, which President Donald Trump said he would impose next week at a rate of 100%.

The European Commission referred to a joint statement agreed with the U.S. following its end-July trade deal, which states that the tariff for pharmaceuticals, semiconductors and lumber would not exceed 15%.

"This clear all-inclusive 15% tariff ceiling for EU exports represents an insurance policy that no higher tariffs will emerge for European economic operators," a Commission spokesperson said.

CAUTIOUS OPTIMISM THAT CAP WILL APPLY

European Trade Commissioner Maros Sefcovic, speaking in Hanoi, said he expected the commitment to be respected, noting that Washington had followed through in lowering car tariffs.

Japan also referred to its joint statement with Washington, which said that U.S. tariff rates on Japanese semiconductors and pharmaceuticals would not exceed those applied to others such as the EU.

A lobbyist for a major drugmaker with large European exports to the United States, said Trump's threat of 100% tariffs on branded drug imports was worrying, but the industry hoped the 15% rate agreed under the U.S.-EU trade deal would apply.

"Nothing is clear yet but we hope the EU-U.S. deal stands," the lobbyist said.

The EU's pharma lobby group, EFPIA, said it was working on the assumption that the EU-U.S. deal applied and that it was still pushing on exemptions for medicines.

Europe and the U.S. have tightly linked medicine supply chains, with Ireland, Switzerland and Germany among top exporters.

In a post on Truth Social on Thursday, Trump announced a fresh round of tariffs that also covered trucks at 25% and furniture at 30-50%.

Trump said the pharmaceutical tariff of 100% would apply to branded or patented drugs unless a given pharmaceutical company was building a manufacturing plant in the United States.

A source at a large European drugmaker said the company was quietly optimistic it would avoid 100% tariffs given the major U.S. investments it has pledged this year.

Novo Nordisk CEO Mike Doustdar said on Friday it was uncertain how the 100% tariff decision aligned with the EU-U.S. trade deal. The Danish maker of weight-loss drug Wegovy and diabetes treatment Ozempic said it exported more active pharmaceutical ingredients from the U.S. than it imported.

Swiss company Roche said on Friday one of its U.S. units has recently broken ground on a new facility.

Swiss rival Novartis, which also made a large U.S. investment pledge earlier this year, did not immediately reply to a request for comment.

An industry source estimated that, based on the initial U.S. indications, the tariffs as outlined by Trump on Thursday would probably not apply to the two Swiss companies.

Drugmakers are also scrambling to cut cash prices for some U.S. drugs after Trump's demand that they do so ahead of a September 29 deadline, with tariffs threatened if he is not satisfied.

(Reporting by Philip Blenkinsop. Additional reporting by Maggie Fick in London, Paul Arnold, Dave Graham in Zurich, Kantaro Komiya in Tokyo, Francesco Guarascio in Hanoiv. Editing by Gareth Jones and Mark Potter)