US tariffs threaten European pharmaceutical industry: its value could fall by up to 5%
A SUERF report warns that the tariffs imposed by Washington in 2025 will particularly affect the pharmaceutical sector in Europe, hitting countries such as Ireland, Belgium and Germany hardest.
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The European pharmaceutical industry could be the biggest loser from the new tariffs imposed by the United States in 2025, according to an analysis published by the Oestrreichische Nationalbank (OeNB) in SUERF Policy Brief No. 1286.
This study, prepared by economists Martin Schneider and David Richard, estimates that the total added value of the eurozone could fall by 0.2% in the first year and up to 0.5% over ten years, with a disproportionate impact on the pharmaceutical sector, which would see a contraction of up to 4.8% in the short term. According to the report, the pharmaceutical sector is the most vulnerable due to its high export exposure to the United States and the geographical concentration of production.
Ireland, where the pharmaceutical sector accounts for a large share of industrial GDP, would suffer a decline of up to 1.2% in national value added, the highest in the eurozone. It is followed by Belgium (-0.3%), the Netherlands (-0.2%) and Germany (-0.2%), which also record significant losses due to their role in the European pharmaceutical supply chain.
Modelling and scope of the study
The analysis is based on a global input-output model constructed from 2019 OECD data, which was used to simulate the effects of US tariffs introduced between January and August 2025.
The model assesses how the reduction in European imports into the US translates into lower production, value added and employment within the eurozone, also considering the indirect effects on global value chains and intra-Community trade.
‘The reduction in European imports into the US translates into lower production, added value and employment within the eurozone.’
However, the authors caution that this is a static assessment, which does not include possible price adjustments, production relocations or compensatory policies, so the results may underestimate or overestimate the actual impact.
Political implications
The report concludes that, although the aggregate effect on the eurozone is not devastating, certain strategic industries, such as pharmaceuticals, require coordinated economic policy responses.
Recommendations include strengthening trade diplomacy with the United States to avoid a tariff escalation, supporting pharmaceutical companies that are most dependent on the US market through incentives for diversification, strengthening the European single market to compensate for the loss of external competitiveness, and accelerating the partial relocation of critical supply chains within the EU.
A risk to leadership in the sector
The pharmaceutical industry is one of Europe’s largest high value-added exporters, with a strong presence in Ireland, Belgium, Germany and Switzerland. The report warns that if tariffs remain in place, the bloc could lose international market share to competitors such as China and India, especially in biotechnology and cutting-edge generic products. ‘The results show that the European pharmaceutical sector’s exposure to the United States represents a tangible economic risk,’ the authors note, ‘and that the loss of competitiveness could have structural consequences if tariffs are prolonged over time.’
In conclusion, the OeNB and SUERF study warns that US tariffs in 2025 could slow down Europe’s industrial recovery and hit its most innovative and export-oriented sector, pharmaceuticals, particularly hard.
