Times are changing, and unpredictability has become the new normal when it comes to tariffs and world trade. Nobody outside the Trump administration knows what will be next, and you get the impression that quite a few of the key people on the inside don´t know either. Consequently, this analysis might be outdated even before it is published.
Trump’s sweeping reciprocal tariffs, unveiled on the self-proclaimed “Liberation Day” April 2, include duties of 20% on the EU, but so far, pharmaceuticals, but not medical technology products, have been excluded. According to the White House’s fact sheet, the list of exemptions includes pharmaceuticals, also covers copper, semiconductors, lumber, bullion, energy, and “other certain materials that are not available in the United States”.Nevertheless, pharmaceutical-specific tariffs look to be a question of when, not if.
Less than a week later, on April 8th, President Trump said the U.S. will soon announce a “major” tariff on pharmaceutical imports. Speaking at an event at the National Republican Congressional Committee, Trump said the tariff will incentivize drug companies to move their operations to the U.S, according to a report from Reuters.
It is obviously a key component in the “Make America Great Again- strategy” to incentivize the big foreign life science companies to manufacture more in the US and create more domestic jobs.
After several years of increasing – some might even say booming – export figures, both Denmark’s and Sweden’s pharmaceutical exports now risk being severely affected by the Trump administration’s tariffs. The companies have, however, not all been caught completely off guard. Companies such as ALK-Abello, the Danish pharmaceutical company specializing in allergy immunotherapy, already operate multiple manufacturing and source material facilities across the United States. Lundbeck, the Danish pharmaceutical company specializing in brain health, also operates several facilities in the U.S, and last but certainly not least, Novo Nordisk, Denmark’s by far largest pharmaceutical company, has had their primary U.S. manufacturing hub in North Carolina since 1993. The North Carolina-based facility produces injectable treatments like Ozempic and Wegovy. In 2024, the company announced a $4.1 billion investment to construct a second fill-and-finish plant at this site, aiming to double its capacity and create 1,000 new jobs. Hopefully, such investments will be duly noticed in Washington, too. My guess is that, in general, several European pharmaceutical companies will try to decrease their vulnerability and increase manufacturing in the US, if possible.
Although the US market is crucial to both Danish and Swedish life science exports, an emerging global trade war resulting from the reciprocal actions from China and the EU will potentially also have enormous negative systemic consequences. Things could go from bad to worse. For small export-oriented economies such as Denmark and Sweden depending on successfully innovating and competing on global markets within high-margin industries, long-lasting tariffs and trade wars are devastating blows to the economy.
In fact, they are harmful to everyone, also the US, and herein lies a flicker of hope. If everyone is suffering and nobody feels that this potential breakdown of global trade will “make them great again”, cooler heads might eventually prevail, and there will be a strong economic and political incentive on all sides to sit down and negotiate reductions of at least some of the newly imposed tariffs.
