White House Clarifies Recent Pharmaceutical Tariffs Exempt Countries with Trade Agreements: Report

A White House official reportedly said on Friday that countries with existing trade agreements with the U.S. would be exempt from the recently announced pharmaceutical tariffs. 

According to a Reuters report cited by TradingView, when asked whether pharmaceutical tariffs would apply to trading partners such as the European Union and Japan, which already have trade deals, the official stated that the Trump administration would honor the 15% cap as part of those pacts. Other nations with U.S. trade deals include Vietnam, the U.K., Indonesia, and the Philippines. Major partners like India, Canada, and Mexico have yet to finalize an agreement.

The clarification comes after President Donald Trump on Thursday announced a 100% tariff on imported, branded, and patented pharmaceutical drugs starting October 1. In his Truth Social post announcing the tariffs, Trump only highlighted that an exception would be made for any company that is “IS BUILDING their Pharmaceutical Manufacturing Plant in America.” He explained that “is building” refers to “‘breaking ground’ and/or ‘under construction’.”

In a note to investors on Friday morning, Jefferies analyst Akash Tewari described the new pharmaceutical tariffs as "a win for Pharma" and "a light at the end of the Trump tunnel," noting that several large-cap companies have already announced U.S. manufacturing projects. Tewari suggested the tariffs and the MFN pilot program may serve as a symbolic “on paper” win ahead of midterms, with limited material impact on pharmaceutical companies.

The 100% tariff is higher than what Trump had indicated in August.  He stated that tariffs would be increased over time, allowing companies sufficient time to build factories and relocate production. Trump had said he would start by charging a “small tariff” on pharmaceuticals and raise the rate over a year or more to 150% and even 250%.

The iShares U.S. Pharmaceuticals ETF (IHE) edged 1.3% higher in midday trade. On Stocktwits, retail sentiment around the ETF improved to ‘neutral’ from ‘bearish over the past day. Meanwhile, the Health Care Select Sector SPDR Fund (XLV) rose 0.86% with retail sentiment trending in ‘bullish’ territory as chatter rose to ‘high’ from ‘normal’ levels.

Read also: PCE Report: Core Inflation Holds Steady At 2.9% In August

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