U.S. Secretary of Commerce Gina Raimondo announced on December 1 that the United States and the United Kingdom have officially reached a zero-tariff agreement on pharmaceutical trade. The U.S. will exempt British-origin drugs and medical technologies from tariffs under Section 232. In return, the U.K. has promised to increase the net price of new drugs by 25% and reduce the drug sales rebate rate. This agreement breaks the previous tariff barriers in U.S.-EU pharmaceutical trade and may trigger a chain adjustment in the global pharmaceutical trade pattern.

It is understood that Section 232 is a tool commonly used by the U.S. to impose tariffs on imported goods on national security grounds. Previously, when applied to British drugs, the average tariff rate reached 12%-18%, significantly increasing the export costs of British pharmaceutical companies. After the agreement takes effect, major British pharmaceutical companies such as AstraZeneca and GlaxoSmithKline will benefit directly – their export costs to the U.S. are expected to decrease by more than $1 billion annually. U.S. domestic medical institutions will also obtain cheaper drug supplies, which is expected to save about $3.5 billion in medical expenditures each year.

Industry analysis points out that the U.S.-U.K. agreement may produce a demonstration effect. The EU has stated that it will promote the resumption of pharmaceutical trade negotiations with the U.S., hoping to reduce tariff costs by following the U.S.-U.K. model. For Chinese pharmaceutical enterprises, this change brings both challenges and opportunities – on the one hand, competition in the U.S. and U.K. markets will become more intense; on the other hand, the reduction of global pharmaceutical trade costs may drive the expansion of the overall market, and Chinese innovative pharmaceutical companies with R&D advantages are expected to expand their overseas markets through this trend. In addition, the U.S. announced on the same day that it will reduce tariffs on South Korean automobiles to 15%, indicating that its trade policy is showing a new feature of “targeted tax reduction”.