US Pharma Tariff Cap: Relief for Drugmakers Amid Trump’s Trade Moves
The Trump administration will honour a US pharma tariff cap of 15% on imports from the EU and Japan — far below the 100% levy initially threatened.
For drugmakers such as AstraZeneca, Eli Lilly, Novo Nordisk, and Merck, this means less disruption and more breathing room for ongoing U.S. investments.
What’s changing?
On Thursday night, President Trump announced 100% tariffs on imports of patented or branded drugs, effective October 1.
However, by Friday, clarification arrived: the cap will remain at 15% for EU and Japanese pharmaceutical companies, in line with existing trade agreements.
Generic drugs — the bulk of US imports — are exempt.
The administration also hinted at exemptions for companies “building” or “under construction” on US manufacturing facilities.
With multiple firms already racing to break ground, the sector is positioned to weather the tariff storm.
Industry response
- AstraZeneca, GSK, Novartis, and Roche have all announced new US manufacturing projects in recent months.
- Eli Lilly, Novo Nordisk: Already expanding domestic production of blockbuster weight-loss drugs.
- Merck: Shares moved in line with the market Friday, reflecting muted impact from the tariff clarification.
Morningstar analysts note that the tariff cap should have “minimal impact” on Big Pharma revenue and profits.
Instead, the sector’s bigger overhang remains pricing policy.
Market implications
Relief over the US pharma tariff cap removes a significant uncertainty that could have further pressured valuations.
Pharma stocks already trade at a steep discount to the S&P 500, around 13–14× forward earnings vs. 23× for the market.
The cap also rewards firms that expand US operations, reinforcing domestic manufacturing as a hedge against trade risk.
Day trading & swing ideas
- Gap setups: Watch AZN, LLY, and NVO for continuation moves if positive tariff headlines drive sector sympathy.
- Intraday volatility: Expect headline-driven spikes around Sept. 29 (Trump’s price-cut deadline).
Tight ranges could break on tariff + pricing news crossing wires. - Swing bias: With tariffs capped, pharma may attract bargain hunters.
Look for swing entries on pullbacks in AZN ($68–70 zone) and LLY ($565–570 support). - Relative strength play: Novo Nordisk (NVO) has outperformed peers; continuation toward $145–150 possible if tariff relief sticks.
Stocks to watch
| Ticker |
|---|
| AZN |
| LLY |
| NVO |
Watch for breakouts above resistance with volume for long swings.
Failed moves back under support can trigger short setups, especially if tariff exemptions remain unclear.
Bottom line
The US pharma tariff cap gives drugmakers near-term relief.
For day traders, it sets up headline volatility and sympathy plays.
For swing traders, it provides a backdrop for long setups in AZN, LLY, and NVO as the sector’s valuation gap could finally start to close.