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U.S. Exempts UK Pharmaceuticals from Section 232 Tariffs

Trade Update • Dec. 3, 2025

Key Points

  • U.S. will apply 0% tariffs to U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology under Section 232.
  • U.K. commits to increasing net prices for new medicines by 25% and reducing VPAG repayment to 15% in 2026.
  • Agreement strengthens cross-border investment in pharmaceutical manufacturing and development.
  • The deal supports U.S. supply chains, high-quality jobs, and leadership in life sciences.
  • It aligns with President Trump’s MFN drug pricing policy and could influence future negotiations with other nations.
Workers in protective lab gear inspect pharmaceutical vials on a production line

On December 1, 2025, the Office of the United States Trade Representative (USTR) announced a landmark agreement under the Economic Prosperity Deal (EPD) that directly addresses pharmaceutical trade. The U.S. will exempt U.K.-origin pharmaceuticals, ingredients, and medical technology from Section 232 tariffs, while the U.K. will increase net prices for new medicines and limit repayments under VPAG. The agreement strengthens supply chains, encourages investment in U.S. pharmaceutical manufacturing, and supports fair pricing for American patients.

The U.K. government also issued a press release confirming the commitments under the agreement.

U.S. Trade Measures

  • Section 232 tariffs on U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology will be eliminated.
  • No Section 301 investigations into U.K. pharmaceutical pricing during President Trump’s term.
  • Ensures continued access for U.K. citizens to innovative medicines.

UK Pricing Commitments

  • Raise net prices for new medicines by 25%.
  • Reduce repayment rates under VPAG to 15% in 2026, maintaining that level for the duration of the scheme.
  • Limit the impact of portfolio-wide rebate schemes on higher prices for new medicines.

Impact on U.S.–UK Trade

The agreement strengthens U.S.–U.K. economic ties in life sciences and encourages continued investment in American pharmaceutical manufacturing. Removing tariffs and setting fair drug pricing stabilizes supply chains, supports jobs, and ensures both nations share the cost of developing new medicines. It also provides a framework that could guide future trade and pricing negotiations with other countries.

Official’s Statement

“Americans should not pay the world’s highest drug costs for medicines they helped fund. This agreement with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade.”

Robert F. Kennedy, Jr., Health and Human Services Secretary

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.

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