Trump’s 100% drug tariffs could hit Asia and Europe very differently
Global pharmaceutical stocks sold off on Friday, as markets reacted to news of 100% tariffs on branded and patented drugs imported into the United States, but significant moves lower haven’t been across the board. While Asia Pacific-listed shares in the sector saw notable falls — with some stocks tumbling more than 5% — the reaction in Europe was notably more muted. This is because many of Europe’s biggest drug exporters have, since U.S. President Donald Trump won a second term in office, been vocal in their commitment to manufacturing in the U.S. By 1:05 p.m. in London (8:05 a.m. ET), only three stocks in the Stoxx Europe Total Market Pharmaceuticals index had shed more than 2%. The majority of shares were only marginally lower, with around a dozen of the over 40 firms in the index — including Switzerland’s Novartis and Britain’s GSK — trading in positive territory. It comes after U.S. President Donald Trump announced late Thursday that from Oct. 1, branded and patented pharma products imported into the United States will be subject to 100% tariffs . Companies that build manufacturing facilities in America will be exempt, Trump said, but only once they have broken ground on the construction of U.S. plants. Among those notching losses on Friday were Novo Nordisk , down 1.7%, Galderma , down 0.4%, and Merck , down 0.6%. Regional heavy hitters Roche and AstraZeneca were marginally higher. But many of the better-performing shares on Friday were companies that have pledged multibillion-dollar investments in the U.S. in the coming years. AstraZeneca is among the companies that have publicly doubled down on their presence across the Atlantic. In July , the British drug giant pledged to pump $50 billion into the U.S. by 2030. Shares of the firm were last seen trading 0.1% higher. “We are a global company, but we are certainly, very much, present and rooted in the U.S.,” CEO Pascal Soriot told CNBC over the summer. “Our investment is reflecting our belief in the growth of this country. We want to contribute to this.” Roche, whose shares were flat on Friday, announced in April that it planned to inject $50 billion into the U.S. over the next five years, a move that it said would create 12,000 new jobs. The cash will be used for new state-of-the-art research and development (R & D) sites, the firm said, while bolstering and expanding manufacturing facilities in Indiana, Pennsylvania, Massachusetts and California. Switzerland’s Novartis, which has pledged a $23 billion investment in the U.S. over the coming years, saw its shares add 0.4% on Friday. Trade deal insulation European pharma stocks could also be largely shielded from the full blow of the looming duties thanks to the trade agreement the European Union reached with the U.S. over the summer. “The United States intends to promptly ensure that the tariff rate, comprised of the [Most Favored Nation] tariff and the tariff imposed pursuant to Section 232 of the Trade Expansion Act of 1962, applied to originating goods of the European Union subject to Section 232 actions on pharmaceuticals, semiconductors, and lumber does not exceed 15%,” an EU Commission spokesperson said in a statement on Friday. “This clear all-inclusive 15% tariff ceiling for EU exports represents an insurance policy that no higher tariffs will emerge for European economic operators. The EU is the only trade partner to achieve this outcome with the U.S.” Meanwhile, JP Morgan strategists downplayed the impact the new tariffs would have on the pharmaceutical sector in a note circulated in the wake of Trump’s announcement. The “potential 100% tariff should largely be avoidable with [U.S.-]based manufacturing buildout,” they said. “And while there remain a number of unknowns on tonight’s announcement … we continue to see a very manageable overall impact from tariffs to our large cap coverage.” Asia impact It’s less clear how big the impact of the new tariffs will be on Asian pharmaceutical companies, however. The moves in pharma shares in the region were more pronounced than those in Europe on Friday. But according to Louise Loo, head of Asia economics at Oxford Economics, many major Asian pharma companies are likely to be given some respite from Trump’s incoming 100% tariffs. “Asia supplies just over 20% of US pharmaceutical imports by value, a meaningful commercial hit for U.S. consumers at face value,” she said. “We therefore expect the U.S. to follow up with announcements detailing protections for some categories of products, blunting the effective tariff burden.” Loo also said there would likely be winners and losers within the region. “Japan and Korea are effectively shielded by trade-deal safeguards,” Loo said. “India may avoid the additional tariff as it exports mainly generics (not branded / patented goods covered under today’s announcement); Singapore, focused on high-value patented drugs, faces the greatest risk unless its firms secure exemptions through active US manufacturing investments.”
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