THERE WAS A sigh of relief among some in government last night when it became clear that the US tariff rate on EU products of 20% has not been extended to pharmaceutical products. 

Sources told The Journal that there was a cautious welcome from those in government, but fear remains that tariffs could be levied on the sector in the near future.

Taoiseach Micheál Martin said that the imposition of 20% tariffs on exports from the EU “is bad for the world economy”. Around €4.2 billion worth of goods and services are traded between the EU and the US daily will be impacted, he said. 

Much of the discussion in the last couple of days centred around Ireland’s pharmaceutical industry.

It is something US President Donald Trump even mentioned in the Oval Office last month when the Taoiseach was sitting next to him. 

Pharmaceuticals account for about 60% of all of Ireland’s exports to the US, so the fact that it was announced that they are not subject to tariffs for now is to be welcomed.

Aidan Meagher, Co-Head of Geopolitical Strategy at EY Ireland said last night that while Trump’s announcement marks a definite shift in the era of open trade, it is positive for Ireland and many businesses based here that pharmaceuticals and semiconductors will not be immediately be subject to the reciprocal tariffs.

Pharma used as pawn in negotiations

However, there are still concerns that big pharma could be targeted by Trump in the coming weeks, with one source stating that they don’t believe Ireland is out of woods yet.

They highlighted that Trump specifically mentioned Johnson & Johnson and Eli Lilly, two companies that have a base here, but that have invested in US recently.

This source also raised concerns that Trump could hold the threat of tariffs on pharma over the EU to try and get deals on tariffs more generally. 

Trump has previously threatened pharma-specific tariffs which could yet be imposed, they warned. 

It is the government’s belief that the real work starts now within the EU where decisions will need to be made on how best to respond. 

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The Taoiseach and Tánaiste have both said this week that it is vital that Europe shows solidarity. There are concerns that with car tariffs hurting the main European players like Germany, that it could prove more difficult to convince the bloc to stick together overall when it comes to any reciprocal tariffs.

Bernd Lange, Chairman of the European Parliament’s International Trade Committee, said yesterday evening that the EU will respond with proportionate and decisive measures.

“We are not backing down. We will defend our sovereignty and we will not change legislation that we have shaped democratically and in the interest of EU citizens, even if this displeases some US billionaires. The countries that have been targeted by these measures must respond with a united front and send a clear message to the US to end this tariff madness,” he said.

“I do hope this administration is genuinely interested in engaging with the EU, but I am not confident. I hope that our arguments and the firmness of our response will provide sufficient incentives to bring the US to the negotiating table. The EU’s door will always remain open to finding a solution,” said Lange.