Background
With continued developments in US trade policy, please see this week’s key updates in our latest round-up on tariffs, global tax and beyond.
The week in summary
Proposed Pharmaceutical Tariffs Announced
On 26 September, President Donald Trump announced via Truth Social, a sweeping new tariff policy targeting pharmaceutical imports into the US:
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. “IS BUILDING” will be defined as, “breaking ground” and/or “under construction.” There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started.”
The key points from the announcement are:
The tariff applies only to branded/patented drugs, not generics.
Exemptions will be granted only to companies with active construction underway for U.S.-based manufacturing facilities (“breaking ground” or “under construction”).
The move is framed as part of a broader national security and domestic manufacturing agenda.
Although the 1 October date has passed, there has yet to be an Executive Order or Presidential Proclamation setting out the specific details in respect of how this new tariff measure will be implemented. However, as reported across multiple new outlets on Monday, the announcement of this increased tariff has seen some large pharmaceutical producers, most notably Pfizer, announce a reduction in prescription drug prices for US consumers and a commitment to invest additional financial resources in US manufacturing, research and development to avoid the additional tariffs.
White House Confirm 15% EU tariff
According to White House officials, President Trump's proposed plan to implement 100% tariffs on certain pharmaceutical products will not affect countries with existing trade agreements. When asked about the implications for trading partners like the European Union and Japan, the official confirmed that the administration would uphold the 15% tariff cap outlined in these agreements.
The announcement, which came ahead of the tariffs due to take effect on October 1st, reassured the EU that its July trade deal with the US protects its pharmaceutical exports from tariffs exceeding 15%. Brussels highlighted the agreement, wherein Washington committed to capping tariffs on pharmaceuticals, semiconductors, and lumber at 15%. EU commission deputy chief spokesperson, Olaf Gill, stated on RTÉ Radio:
“This clear all-inclusive 15% tariff ceiling for EU exports represents an insurance policy that no higher tariffs will emerge for European economic operators, The EU and US continue engaging towards implementing the joint statement commitments, while exploring further areas for tariff exemptions as well as wider cooperation."
Further Sector Specific Tariffs Announced
On 29 September, President Trump signed a Presidental Proclamation laying out his argument that timber, lumber and furniture imports are eroding U.S. national security to justify the new duties under Section 232 of the Trade Act of 1974.
Starting 14 October, products within the below categories will be subject to additional duties at the rates of (a) 10%, (b) 25% and (c) 25% respectively:
- imports of softwood timber and lumber
- imports of certain upholstered wooden products
- imports of kitchen cabinets and vanities, as well as parts imported for use in kitchen cabinets and vanities.
In addition, President Trump announced plans to impose a 100% tariff on all foreign films entering the United States. This proposal, first mentioned in May, could significantly impact Hollywood's global business operations.
President Trump expressed his belief on Truth Social that other countries had undermined America's film industry, stating “Our movie making business has been stolen from the United States of America, by other Countries, just like stealing candy from a baby”. The details of how such tariffs would be legally enforced remain unclear, with neither the White House nor major US studios such as Warner Bros Discovery, Paramount, and Netflix providing immediate comments.
In addition, the Proclamation on tariffs imposed on wood products clearly outlines that any additional tariffs will be capped at 15% for the EU and Japan, and 10% for the UK, upholding the terms of the respective agreements.
Irish reaction
Enterprise Ireland remains confident that the agreed 15% tariff cap on EU goods still stands, despite recent remarks from the US President suggesting higher tariffs. Jonathan McMillan, head of the agency's Trade and Tariff Response Team, reassured that the trade deal finalised between the EU and US in July was reaffirmed in a joint statement last month, confirming a tariff ceiling for pharmaceuticals and other products. Mr McMillan stated:
"The terms reiterated again on 21 August, and we are absolutely confident that that ceiling still applies. It's 15% for pharmaceutical and other product areas. We're also really confident, working with our colleagues across government, that there's further negotiation happening on other areas, and we're hoping for our clients that there'll be other areas that will have zero tariffs or carve outs, as they're called."
Though the deal provides some clarity, Mr McMillan acknowledged the ongoing complexity of the situation. He noted that efforts are being made to negotiate zero tariffs or exemptions in other areas, as Enterprise Ireland continues lobbying and working with government partners.
Economic and Social Research Institutes (ESRI) Autumn Economic Commentary
On 25 September, the ESRI published their quarterly economic commentary outlining considerations and impact with respect to the Irish economy in light of the US trade situation. As noted in the overview to the commentary, the ESRI states:
“Since our last Commentary, the US and the EU reached an agreement on tariffs, which has removed a considerable amount of uncertainty from the economic landscape. While this agreement reduces uncertainty in the short term, the new situation of a 15% tariff represents a deterioration in our trading environment, and will likely be impactful for many firms and sectors.”
In a Research Note published with the Commentary, John Fitzgerald examines the Irish pharmaceutical sector in detail. He considers the significance of the sector in the Irish economy and the implications of US trade policy. This analysis suggests that, at least in the short term, US tariffs will impact profits of pharmaceutical companies operating in Ireland, rather than output or employment.
In addition, the Commentary discusses recent increases in food price inflation and its differential impact across the income distribution, with lower and middle-income households more impacted by increases in food prices.
RTE Reports: China's Manufacturing Slump Continues as Trade Tensions Persist
According to official data reported by RTE, China's factory activity continued to contract for the sixth consecutive month in September, amid ongoing domestic consumer challenges and trade uncertainties. The manufacturing purchasing managers' index (PMI) registered at 49.8, indicating a slight contraction as it remains below the 50 threshold that separates growth from contraction and signifies a persistent contraction since April due to impacts from the US-China trade war.
Consumer prices in China fell at their fastest rate in six months in August. As noted by Zhiwei Zhang, of Pinpoint Asset Management, suggested that given GDP growth above 5% in the first half of the year, the Chinese government may accept a slower growth rate in the second half, as long as it doesn't threaten the annual growth target of five percent. The industrial slowdown occurs amid continued negotiations between Beijing and Washington to resolve their trade conflict, with an extension of the truce on most reciprocal tariffs until November 10.
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