UK Secures Zero-Tariff Access for Pharma Exports to the US
The UK and the US have reached an agreement to keep tariffs on UK pharmaceutical shipments into America at zero. Under this deal, the UK will raise NHS medicine prices in exchange for a guarantee that US import taxes on UK-made pharmaceuticals will remain at zero for three years. Notably, this marks the first time in o
The UK and the US have reached an agreement to keep tariffs on UK pharmaceutical shipments into America at zero. Under this deal, the UK will raise NHS medicine prices in exchange for a guarantee that US import taxes on UK-made pharmaceuticals will remain at zero for three years. Notably, this marks the first time in over 20 years that NHS medicine costs are set to rise.
The deal comes after US President Donald Trump threatened to impose tariffs as high as 100% on branded drug imports, a significant UK export to the US. Business and Trade Secretary Peter Kyle stated the agreement ensures UK pharmaceutical exports, valued at at least £5 billion annually, will enter the US tariff-free, safeguarding jobs and encouraging investment. This move aims to position the UK as a global life sciences hub.
In the 12 months ending September, the UK exported £11.1 billion worth of medicines to the US, representing 17.4% of all UK exports. Pharmaceuticals had been exempt from earlier US tariffs announced this year, though Trump repeatedly threatened to increase tariffs, citing concerns over America's reliance on overseas medicines and the desire to boost domestic manufacturing.
The UK will raise its treatment price threshold by 25% and increase NHS medicine spending from 0.3% to 0.6% of GDP over ten years. Additionally, drug companies’ repayment cap to the NHS will be set at 15%, down from over 20% last year. These measures, combined with a three-year tariff protection, aim to balance affordability and trade interests.
Also Read: India Reroutes Exports After 50% US Tariffs Hit Trade
The White House described the deal as a historic step towards fair contributions from developed nations. The agreement also eases ongoing tensions between the UK government and pharmaceutical firms over drug costs and approvals. While some experts warn of increased NHS spending, the government emphasises the benefits of tariff stability for UK pharma exports, especially amid recent investment withdrawals by US firms, such as GSK and AstraZeneca, that have shifted attention to the US. Overall, the deal marks significant progress in UK-US pharmaceutical trade relations.
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