Despite a recent charm offensive that included a lavish state visit and a banquet with King Charles, the UK has been hit with the threat of severe new tariffs from Donald Trump. The move serves as a stark reminder that diplomatic pleasantries do not guarantee trade security. The UK’s pharmaceutical sector is facing the most daunting prospect: a 100% duty on branded drugs, which could decimate exports to the US.
This latest trade salvo exposes a critical gap in the UK’s tariff agreement with the US, which was negotiated by Keir Starmer five months ago. That deal successfully shielded cars, steel, and aerospace goods but left pharmaceuticals unprotected. A promise made by Trump in May for “preferential treatment” for the UK’s drug industry has now been overshadowed by this aggressive new policy, set to begin on October 1st.
The British government is now in damage control mode, promising to “actively engage” with Washington over the coming days. A spokesperson underscored the economic importance of the threatened sectors and reaffirmed the government’s commitment to fighting for the interests of UK industry. The timing is particularly jarring, coming so soon after the UK went to great lengths to welcome the US leader.
There is a theory, however, that the threat is not as sweeping as it seems. Some analysts, like Lale Akoner from eToro, argue that the tariffs are designed to pressure companies into establishing manufacturing bases in the US. Major firms like AstraZeneca, Roche, and Novartis are already doing so and thus “likely keep them out of the firing line.” This suggests that companies with existing or planned US operations may be insulated from the worst effects.
The shockwaves are not limited to the UK. European truck makers are also reeling from a proposed 25% tariff, which the German auto trade body called “incomprehensible.” It warned that such trade barriers would ultimately harm the US economy by disrupting supply chains and increasing costs. The announcement has already led to a drop in the share prices of companies like Daimler Trucks.