The European Union and the United Kingdom are facing Donald Trump’s latest tariff threats from vastly different positions, highlighting the divergent outcomes of their recent trade negotiations. While the EU believes its 15% blanket tariff agreement acts as an “insurance policy,” the UK is grappling with the total exposure of its vital pharmaceutical sector.
Trump’s announcement of a potential 100% duty on branded drugs has thrown the UK into turmoil. This specific industry was a glaring omission from the tariff deal secured by Keir Starmer, which focused on cars and steel. As a result, the British government is now in reactive mode, “actively engaging” with the US to prevent catastrophic damage to a cornerstone of its economy.
In contrast, the EU has reiterated its confidence in its existing agreement. Officials stated that their deal includes pharmaceuticals and ensures that “no higher tariffs will emerge for European economic operators.” However, this confidence is being tested by a separate US investigation into medical devices, a sector where the EU is a major exporter of products ranging from pacemakers to X-ray machines, signaling that new trade battles could be on the horizon.
Despite the EU’s supposed protection, individual European industries are still feeling the heat. The German auto industry has strongly criticized a new 25% US tariff on trucks, and Swedish furniture giant Ikea has said the tariffs are making business with the US “more difficult.” This suggests that even a blanket agreement cannot fully insulate industries from targeted protectionist measures.
Meanwhile, some analysts suggest the ultimate goal of Trump’s policy is to drive investment into the US. The tariffs may be designed to spare companies that commit to American manufacturing. Firms like Novartis and Roche are already positioning themselves to be exempt by building US facilities. This leaves UK companies without a US presence in a particularly precarious and uncertain position.
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