United States to Remove Tariffs on UK Pharmaceuticals, Suspend Section 301 Actions under New Trade Deal

2 minutes

The United States will exempt UK-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from section 232 tariffs and suspend future section 301 actions targeting UK pharmaceutical pricing practices for the duration of President Trump's term, under a new bilateral agreement in principal announced on 1 December 2025.

The Office of the United States Trade Representative (USTR), together with the Departments of Commerce and Health and Human Services, confirmed in a 1 December 2025 news release that the tariff exemptions form part of a broader US–UK Economic Prosperity Deal (EPD). The agreement aims to address long-standing imbalances in pharmaceutical trade and foster innovation and investment in both countries.

pharmaceutical production of liquid pharmaceuticals

This development builds on measures introduced under the EPD earlier this year. On 16 June 2025, President Trump issued an executive order implementing the general terms of the deal, which included tariff-rate quotas for UK-made vehicles, reduced tariffs on automotive parts, elimination of tariffs on aerospace products, and preferential treatment for UK pharmaceuticals subject to national security reviews. Both countries also agreed to negotiate preferential outcomes on pharmaceuticals and maintain ongoing dialogue to avoid future tariff conflicts (seePresident Trump Formalizes US–UK Trade Deal, but Steel and Aluminum Talks Ongoing (17 June 2025), US-UK Trade Agreement in Depth: Annual Tariff Reductions on UK Car Imports, Tariffs Lifted on US Beef Exports, MFN Rates for UK Steel and Aluminum Imports and More (9 May 2025) and US President Trump Announces Comprehensive US-UK Trade Deal, Marking New Era in Bilateral Relations (8 May 2025)).

In exchange for the United States removing tariffs and suspending trade actions, the United Kingdom committed to significant pricing reforms, including a 25% increase in the net price paid for new medicines by the National Health Service (NHS) and a reduction in repayment rates under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) to 15% starting in 2026. The tariff exemptions are expected to strengthen supply chains and encourage continued investment by UK pharmaceutical companies in the United States. Health and Human Services Secretary Robert F. Kennedy, Jr. emphasized that the agreement "strengthens the global environment for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade."

Note: Section 232 tariffs are imposed under the Trade Expansion Act of 1962 when imports are deemed to threaten US national security. They have previously applied to steel, aluminum, and other strategic goods. Meanwhile, Section 301 actions are authorized under the Trade Act of 1974 to counter unfair trade practices, often through retaliatory tariffs.

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