The US Put a 100% Tariff on Brand-Name Drugs. Europe's Pharma Giants Mostly Pay 0% to 15%. Here's Why.
- A presidential proclamation of April 2, 2026 imposed a 100% Section 232 tariff on imported patented drugs and their ingredients.
- It took effect July 31, 2026 for 17 named companies, including AstraZeneca, Novartis, Novo Nordisk, Sanofi, GSK, Boehringer Ingelheim and EMD Serono. Everyone else faces it from September 29, 2026.
- Products from the EU, Switzerland, Japan and South Korea are capped at 15%; the UK at 10%, which could fall to zero.
- 13 of the 17 companies signed "most-favoured-nation" pricing deals and pay 0% until January 20, 2029. Firms with approved US onshoring plans pay 20%.
- Generics, biosimilars, orphan drugs, cell and gene therapies and several other categories are excluded.
The 100% headline, and the real number
In April, the US announced a 100% tariff on imported patented medicines. For Europe, that sounded like a disaster. Pharmaceuticals are one of the continent's most valuable exports, and drugmakers such as Novo Nordisk, AstraZeneca, Novartis, Roche and Sanofi are among Europe's largest listed companies.
Six months later, the tariff is fully in place. From September 29, it applies to every importer of patented drugs. But the rate most European drug giants actually pay is 0% to 15%.
How the tariff works
The April 2 proclamation, issued under Section 232 of the Trade Expansion Act, set a default 100% duty on patented drugs and their active ingredients. Then it layered on exceptions:
| Situation | Tariff rate |
|---|---|
| Default for patented drugs | 100% |
| Made in the EU, Switzerland, Japan or South Korea | 15% |
| Made in the United Kingdom | 10%, could fall to 0% |
| Company has a Commerce-approved US onshoring plan | 20% |
| Company has an onshoring plan and a drug-pricing (MFN) deal | 0% until Jan. 20, 2029 |
| Generics, biosimilars, orphan drugs, cell and gene therapies, and other listed categories | Excluded |
Two deadlines
- July 31, 2026: the tariff started for 17 named companies. The list includes European groups AstraZeneca, Novartis, Novo Nordisk, Sanofi, GSK, Boehringer Ingelheim and EMD Serono (Merck KGaA's US arm), plus Genentech, owned by Switzerland's Roche.
- September 29, 2026: the tariff applies to everyone else.
Of the 17 named companies, 13 had already signed "most-favoured-nation" pricing agreements with the US government between December 2025 and March 2026. Those companies pay 0% through January 2029.
Why Europe's giants mostly escaped
Two shields protect European drugmakers:
- Trade deals. The EU and Switzerland negotiated a 15% cap on pharmaceutical tariffs. The UK got 10%.
- Company deals. Most of the biggest drugmakers traded concessions for a 0% rate: lower prices on some medicines sold to the US government and new investment in American factories.
The result: the 100% rate mostly hits patented drugs from countries without a trade deal, made by companies without a pricing agreement.
Where the cost really shows up
The tariff threat was defused, but not for free. Investors should look for the costs in three places:
- Lower US prices. MFN deals tie some US prices to what other rich countries pay. The US is the most profitable drug market in the world, so any price cut there matters.
- Spending on US factories. Many European drugmakers have announced billions in US manufacturing investment. That's cash that can't go to dividends or buybacks for now.
- Deals that expire. The 0% rate lasts until January 20, 2029. What happens after that is unknown.
What it means for investors
If you own a Europe ETF, you own a meaningful slice of pharma. Healthcare is one of the largest sectors in European indexes. The tariff settlement removes a major worst-case risk.
If you own individual drugmakers, the tariff is no longer the main story. Patent expirations, new drug approvals and pricing on blockbuster drugs, such as obesity treatments, matter more. See Pharma Patents and the Patent Cliff.
Smaller European biotech and specialty pharma companies without a US pricing deal are more exposed, although EU-made products are still capped at 15%.
For the US side of the story, including what the September 29 deadline means for drug prices and US-listed healthcare stocks, see The 100% Drug Tariff Hits Everyone on Sept. 29.
The honest uncertainty
Tariff rules have changed several times since April, and they can change again. The UK rate could fall to zero with a new agreement. The MFN deals run out in early 2029, after the current US administration's term. For long-term investors, the lesson is to price European pharma on its drugs and its patents, and treat US trade policy as a risk that has shrunk, not disappeared.
Frequently asked questions
What tariff do European drugs face in the US?
Patented drugs made in the EU or Switzerland face a 15% US tariff under trade agreements, and UK-made drugs face 10%. Companies that signed most-favoured-nation drug-pricing deals with the US government pay 0% until January 20, 2029. Generics and several specialty categories are excluded entirely.
When do the US pharmaceutical tariffs start?
For 17 large drugmakers named in the proclamation, the tariff started July 31, 2026. For all other importers of patented drugs, it starts September 29, 2026.
Are European pharma stocks a buy because of the tariff exemptions?
The exemptions remove the worst-case scenario, but they weren't free. Companies agreed to lower some US prices and to invest in US manufacturing, which can pressure margins. Each company's patent expirations, pipeline and valuation matter more than the tariff now. RiskStock doesn't give personal investment advice.
Will the tariffs raise drug prices in the US?
For most major brands, probably not much, because big drugmakers either pay 0% under pricing deals or 15% or less under trade agreements. Generics, which make up most US prescriptions, are excluded. Smaller importers without deals may face higher costs.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 26, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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