Trump tariffs could target huge UK industry next after escalation with China

As the impacts of Donald Trump’s tariffs continue to ripple through the world’s economies, one sector is nervously wondering if it’s next in the firing line.

Following the US President’s ‘Liberation Day’ speech last week, his administration said there was a carve-out for the drug industry.

This was important news for the UK, which exported almost £9 billion of medicinal and pharmaceutical products to the US in 2023.

But it’s expected that this exemption may not last for long – and Trump may in fact be preparing to place a special tariff on global drug imports, like he has done for products like steel and cars.

Asked earlier this year about a potential tariff on foreign pharmaceutical imports, he said: ‘It’ll be 25 percent and higher, and it’ll go very substantially higher over a course of a year.

‘But we want to give them time to come in, because, as you know, when they come into the United States and they have their plant or factory here, there is no tariff.’

The UK’s two biggest drug makers, AstraZeneca and GlaxoSmithKline, have some manufacturing bases in the US which could help them dodge the levies to some extent.

However, tariffs of the size Trump has proposed would add to what Health Secretary Wes Streeting has called an ‘extremely turbulent situation’ for the industry.

He told Sky News this morning: ‘There have been challenges in terms of manufacturing, challenges in terms of distribution, and if we start to see tariffs kicking in, that’s another layer of challenge, but we watch this situation extremely closely.

‘We work on a daily basis to make sure that we have the medicine supply this country needs.’

One industry body declined to comment to Metro, on the basis that the President is so unpredictable, nothing can be certain about the details of his plan or even whether it will go ahead.

Is Trump considering a 90-day pause on tariffs?

The US stock market bounced around wildly yesterday as reports spread that Trump could be considering a pause in the introduction of some tariffs.

But in a White House press conference alongside Israeli President Benjamin Netanyahu, he said that would not be happening.

Trump added to stock market uncertainty, though, by declaring his administration was open to negotiations from governments around the world.

It was unclear if any deals resulting from those talks would result in changes to tariff levels, though.

In an article for the Financial Times, Trump trade advisor Peter Navarro wrote: ‘This is not a negotiation. For the US, it is a national emergency triggered by trade deficits caused by a rigged system.’

What is happening between Trump and China?

Meanwhile, fears of an escalating trade war between the US and China could be realised in the coming days.

China, the world’s second largest economy after the US, is the hardest nut Trump is attempting to crack with his tariffs and he appears willing to go to extreme lengths to get his way.

Last Wednesday, the President announced 34% additional tariffs would be imposed on China, among the highest in the world.

Beijing hit back on Sunday with a counter-tariff at the same level on all US goods being imported to the country.

This infuriated Trump, who said in a social media post yesterday an extra 50% tariff would be placed on China if it didn’t backtrack today.

If that comes into effect, US companies importing products from China will have to pay a 104% levy on them.

But the Chinese insisted they would not back down, saying ‘pressuring or threatening China is not a right way to engage’.

Could this lead to a global recession?

Analysts in the US have suggested Trump’s unilateral introduction of worldwide tariffs have made a recession in that country more likely.

But there’s still some uncertainty over the extent of the impact internationally.

Stock markets have taken serious hits in Asia, Europe and North America, but while they can indicate where economies are heading, the markets can’t show us what’s going on in the long term.

We do know that the UK’s economic growth has been very low over the past year, and the economy shrank by 0.1% in January after rising by the same amount between October and December.

One bright spot for Chancellor Rachel Reeves is the fact the British economy is 75% services – left untouched by the tariffs – rather than manufacturing.

However, such a radical reshaping of the global economy will have broad and unpredictable consequences. Nothing like it has been seen in the modern era.

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