Yesterday, at the Group of Seven (G7) Summit in Canada, US President Donald Trump and British Prime Minister Keir Starmer signed a deal that officially lowers various tariffs on imports coming from Britain.1,2 The news builds off the original announcement announced last month.3
Key details of the US-UK tariff deal
Essentially, as Reuters and AP both note, this particular agreement focuses on British aerospace materials and automobiles; US tariffs on these products would be removed, signifying that the UK would be exempt from the 10% tariffs Trump wanted to enact on other nations. By the end of June, the tariffs on vehicles would decrease from 27.5% to 10%, on a quota of up to 100,000 annually.
It remains to be seen however how steel and aluminum will be impacted—the UK had expected 0% tariffs on core steel products, but updates on this matter are to come.
“The United Kingdom also committed to working to meet American requirements on the security of the supply chains of steel and aluminum products intended for export to the United States and on the nature of ownership of relevant production facilities,” noted a White House executive order (EO).4 “Provided the United Kingdom meets these requirements, the United States intends to promptly construct a quota at most-favored-nation rates for steel and aluminum articles and certain derivative steel and aluminum articles that are products of the United Kingdom in the context of implementing the General Terms.”
Key Takeaways
- The new agreement eliminates or reduces tariffs on British aerospace materials and automobiles, with vehicle tariffs dropping from 27.5% to 10% for up to 100,000 units annually.
- While the deal hints at future negotiations on pharmaceuticals, potential 25% tariffs could still be imposed, risking a $51 billion annual increase in US drug costs.
- The UK is seeking exemptions on core steel and aluminum products, but final decisions are pending, contingent on meeting US supply chain and security requirements.
Potential impact on pharmaceuticals and healthcare costs
Per Ed Schoonveld in his latest column5 for Pharmaceutical Commerce, “under the final rule of the previous plans, prices of prescription drugs in the US would have been capped at the lowest price, adjusted for purchasing power, and paid by any country in the Organization for Economic Cooperation and Development that has a gross domestic product (GDP) per capita that is at least 60% of the US GDP per capita. The MFN model would have operated as a “test” for seven years.”
Such levies could certainly have repercussions on the greater supply chain, but in terms of the pharmaceutical sector, there is yet to be any sort of indication as to when 25% tariffs on meds will be imposed. If that does occur, it has the potential to raise drug costs in the United States by nearly $51 billion yearly, while also raising US prices by as high as 12.9%, according to a report commissioned the trade association, Pharmaceutical Research and Manufacturers of America (PhRMA).6
At this point, existing tariffs have also indirectly hit medtech (devices and equipment), and iData Research, a market researcher, anticipates major supply disruption across the sector.
"With the US medical device and pharmaceutical sectors highly dependent on global supply chains, tariff volatility is triggering real consequences, from procurement delays to pricing spikes," said Dr. Kamran Zamanian, iData Research’s CEO. "In today's trade environment, protecting margins in the $200B medtech industry requires contingency planning, supplier diversification, and close monitoring of policy changes."
Future agreements could include UK pharmaceutical imports
In that same breath, the previously alluded to White House EO, 4 added that “the United States and the United Kingdom committed to negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients that are products of the United Kingdom, contingent on the findings of an investigation regarding pharmaceuticals and pharmaceutical ingredients under section 232, and provided that the United Kingdom complies with certain supply chain security standards.”
Section 232 refers to the Trade Expansion Act of 1962, providing Trump with the authority to restrict imports that post a threat to national security. Many may recall that it’s been used to enact tariffs on steel and aluminum imports.
Stay tuned to Pharma Commerce for the latest tariff updates.
References
1. Renshaw J, Shalal A. US and UK announce a trade deal, but steel imports unresolved. Reuters. June 17, 2025. Accessed June 17, 2025. https://www.reuters.com/business/autos-transportation/us-uk-trade-deal-be-completed-very-soon-says-starmer-2025-06-16/
2. Lawless J, Weissert W. US and UK announce a trade deal, but steel imports are still being negotiated. AP. June 16, 2025. Accessed June 17, 2025. https://apnews.com/article/trump-starmer-trade-deal-beef-g7-52bea5eb383a0b45d0d83e1982d277bf
3. Fact Sheet: U.S.-UK Reach Historic Trade Deal. The White House. May 8, 2025. Accessed June 17, 2025. https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal/
4. Implementing the General Terms of the United States of
America-United Kingdom Economic Prosperity Deal. June 16, 2025. Accessed June 17, 2025. https://www.whitehouse.gov/presidential-actions/2025/06/implementing-the-general-terms-of-the-united-states-of-america-united-kingdom-economic-prosperity-deal/
5. Schoonveld E. Reviewing the Most-Favored National Model. Pharmaceutical Commerce. June 13, 2025. Accessed June 17, 2025. https://www.pharmaceuticalcommerce.com/view/reviewing-the-most-favored-nation-model
6. Saraceno N. The Tariff Effect: Greater Supply Chain Prepares for Repercussions. Pharmaceutical Commerce. June 4, 2025. Accessed June 17, 2025. https://www.pharmaceuticalcommerce.com/view/tariff-effect-greater-supply-chain-repercussions
