Trump backs down from 250% EU pharma tariff in deal

August 22, 2025

President Donald Trump has reduced proposed tariffs on EU pharmaceuticals and semiconductors from potential rates of 250% and 100% to 15%, as detailed in the newly released US-EU trade agreement. The deal requires the EU to eliminate tariffs on US industrial and agricultural goods before the US will reduce its 27. 5% tariff on European vehicles to 15%.

Who is affected

EU exporters of pharmaceuticals and semiconductors, particularly from Ireland and other European nations including Denmark-based Novo Nordisk
European automobile manufacturers and their US customers
US producers of industrial goods and agricultural products (fresh fruits, vegetables, pork, bison meat, tree nuts)
Wine and spirits exporters on both sides of the Atlantic, including French wine exporters and US distillers
US restaurants and bars facing challenges from higher tariffs on EU spirits
Businesses and consumers across both the US and EU trading blocs

What action is being taken

The US is applying a 15% tariff rate on most European goods, including semiconductors and lumber exports, starting September 1
The EU is working to reduce tariffs to zero on all US industrial goods and certain agricultural products
EU Trade Commissioner Maros Sefcovic is planning to begin the legislative process in August to secure the retroactive application of the 15% car tariff
European automobile manufacturers are currently paying millions of euros in tariffs daily since April
The US and EU are engaging in ongoing trade negotiations as part of what they describe as a "first step in a process"

Why it matters

The agreement provides protection for EU exporters who could have faced substantially higher tariffs (up to 250% for pharmaceuticals)
The deal offers predictability and stability for the world's largest trading partnership
European car manufacturers will still face elevated tariffs (15% compared to the previous 2.5%), impacting prices for US customers
The agreement creates "historic access" to European markets for American producers
Wine and spirits sectors on both sides face "major difficulties" without tariff exemptions
US distillers lack certainty for future growth planning without zero-for-zero tariffs

What's next

The EU plans to begin the legislative process in August to implement zero tariffs on US goods, which would trigger the retroactive application of the 15% car tariff from August 1
According to the joint statement, this agreement is a "first step in a process" that could be expanded as the US-EU relationship develops
EU Trade Commissioner Sefcovic indicated that while wine and spirits weren't exempted, "these doors are not closed forever"

Read full article from source: BBC