BRUSSELS — Europe needs to get its “act together” and unleash its potential in the pharmaceutical sector, supporting it with better incentives and ensuring access to innovation for patients, urged Stefan Oelrich, president of Bayer’s pharmaceuticals division. “Europe used to be the pharmacy of the world. Nine out of 10 new medicines were discovered in Europe. That’s no longer the case,” Oelrich, who is also president of the European Federation of Pharmaceutical Industries and Associations (EFPIA), said at the POLITICO 28 Gala Dinner. “We’re losing competitiveness rather than gaining.” China and the U.S. are pulling ahead on pharmaceutical innovation and clinical trials. About one third of medicines approved by the U.S. Food and Drug Administration (FDA) don’t make it to Europe, Oelrich said. And amid the U.S. tariffs threat, companies are increasingly looking outside of Europe for investments. But there is hope — both for the pharmaceutical industry and beyond. Per Franzén, CEO and managing partner at EQT, a global investment organization, said he is seeing “an unprecedented interest to invest into Europe.” “It’s a real window of opportunity, a unique moment in time for Europe,” he said. “In order to make the most out of that opportunity, what we need to do is really to drive a more business-friendly, more innovation-friendly agenda,” he said. But with the pace of change, driven by artificial intelligence, “time is of the essence,” he added. Over-regulation isn’t holding Europe back in medicines innovation, it’s a lack of substantial incentives for companies to invest in Europe, Oelrich said. But it doesn’t have to be this way, he said: “We have some of the best universities in the world that publish some of the coolest science in the world. So there is no reason why this wouldn’t work. And we need to get our act together,” he said. “Instead of trying to complicate our lives and come up with a new bureaucratic idea, we should come up with with ways of how we unleash our forces.”

BRUSSELS — EU lawmakers have clinched a long-awaited agreement on the bloc’s overhaul of its two decades-old pharmaceutical rules — one of the EU’s biggest health files. The revamp is designed to restore Europe’s competitive edge and give companies more certainty that the EU remains an attractive market, while also pushing for more equal access to medicines across member countries. The deal between the Parliament and the Council was struck at 5 a.m. on Thursday, more than two years after the Commission tabled the proposal, which consists of directive and regulation, in spring 2023.  It marks a major victory for the Danish presidency, which pledged to wrap up the file before the end of the year, and for Health Commissioner Olivér Várhelyi, who has pushed to seal the reform amid growing geopolitical uncertainty.

Lobbyists for some of the world’s largest drug companies are parading a new pricing deal in the U.K. as a model the rest of Europe should emulate if it wants to keep drugmakers from bailing for America. To President Donald Trump and the lobbyists’ delight, British officials agreed to spend 25 percent more on new medicines in exchange for three years of tariff relief on pharmaceutical exports to the U.S. The move comes as major drugmakers like AstraZeneca and Merck scrap projects in the U.K., and the Trump administration uses tariff threats to get pharma to raise prices on Europeans in order to cut them for Americans. For Washington’s lobbyists, the deal reflects the new influence playbook, as Trump’s tariff threats force companies to negotiate directly with the White House. Industry leaders say the U.K. deal could serve as a template for how the EU and other major trade partners handle the Trump administration’s break from free market norms, and stay competitive. “The U.K. is the canary in the coal mine,” said Stephen Farrelly, global head of pharma and health care at ING, a Dutch bank. “The pressure is rising on the EU to do something similar.” Lobbyists for drug companies are pounding the point home. Dorothee Brakmann, general manager of Pharma Deutschland, Germany’s industry lobby, warned that if Germany did not pursue a similar path to the U.K., Trump’s tariffs presented a “real geopolitical risk.” “The UK-US agreement is an important signal for Europe’s pharmaceutical landscape. …[It] reinforces the need to reassess how we can make our own reimbursement system more flexible, more innovation-friendly and more internationally competitive,” she wrote POLITICO in a statement. Alex Schriver, senior vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, the U.S. industry lobby for brand-name drugmakers, echoed the German pharma group’s call for similar country deals. “The agreement establishes important first steps by the U.K. to pay its fair share for innovative medicines and directly benefits American patients by exempting medicines from tariffs. We encourage the Trump Administration to seek similar agreements with other nations,” Schriver said in a statement. Henrik Jeimke-Karge, spokesperson for Verband Forschender Arzneimittelhersteller, another German pharmaceutical group, said that the lack of an EU agreement meant continued uncertainty for the region. “The pharmaceutical industry in the U.K. has now gained planning security. Such an agreement is still pending for the EU. …The risk of customs duties remains high and uncertainty persists,” he said in a statement. Trump has repeatedly blamed European pharmaceutical companies for higher U.S. drug prices, threatened a 100 percent tariff on pharmaceutical products and demanded drugmakers implement “most favored nation pricing,” which would bring U.S. prices in line with those paid in other wealthy nations. The threats have triggered British and European drugmakers to bolster their defenses on K Street, Washington’s lobbying corridor. Lobbying spending from July to September from GSK, AstraZeneca, Novartis, NovoNordisk, and Genentech, a subsidiary of Roche, were the highest for the time period in at least a decade. Year-to-date spending from AstraZeneca, EMD Serono, Novo Nordisk and Sanofi are also at a 10-year high. European drugmakers are also ramping up their hiring of outside lobbying firms. DLA Piper, Corcoran & Associates, and B Hall Strategies registered to lobby for Novartis this year, which hired no new outside firms last year. Lobbyists for Novartis now include Richard Burr, the former top Republican on the Senate Health, Education, Labor and Pensions Committee and Michael Corcoran, a prominent Republican lobbyist from Florida. Alkermes and Novo Nordisk have hired Ballard Partners, a Trump-connected lobbying firm, and Genentech has hired lobbyists at Miller Strategies, including Jeff Miller, a long-time Republican strategist and Ashley Gunn, a former special assistant to Trump in his first term. GSK, Sanofi and Novo Nordisk, meanwhile, have all hired lobbyists at Checkmate Government Relations this year, including Fritz Vaughan, a Treasury official in the first Trump administration. “Policy is not siloed from business strategy right now,” said Allison Parker-Lagoo, deputy of the North America health practice at APCO, a public and government relations firm that advises drug companies. “The geopolitical environment is just requiring that everyone really think critically about how they’re showing up in each market that they operate in.” In exchange for tariff reprieve, five drugmakers, including AstraZeneca, EMD Serono and Novo Nordisk have cut deals with Trump to lower prices. The pharmaceutical industry has together announced more than $400 billion in commitments to U.S. manufacturing, research and development since January, according to ING, the Dutch bank, including a $50 billion commitment from Roche, $23 billion from Novartis, and $20 billion from Sanofi. “Trump is demonstrating that he’s willing to go further than anyone else to achieve his goals…Most companies and industries are having a conversation saying, ‘Let’s bring some solutions to the table,’ as opposed to just sitting back and holding the line,” said one health care lobbyist granted anonymity to speak candidly about strategy. “It’s a big shift, and you don’t want to be the last one to the dance,” the lobbyist added. Concerns over Europe’s pharmaceutical competitiveness were mounting prior to Trump’s second term. E.U. spending on research and development grew on average 4.4 percent annually from 2010 to 2022, while U.S. spending grew by 5.5 percent and China by more than 20 percent, according to the European Federation of Pharmaceutical Industries and Associations, the EU’s pharmaceutical trade group, which did not respond to request for comment. Last year, the U.S. saw $6.7 billion in pharmaceutical manufacturing investments from foreign companies, compared to $5.9 billion in Europe, according to estimates from fDi Markets, a database owned by the Financial Times. Advocates for drug companies warned that the Trump administration’s pricing and tariff policies will accelerate the shift. “It speaks to the reorienting of the global biopharmaceutical economy…For the first time, the U.S. government is getting involved in the pricing and access behaviors of other countries,” said Kirsten Axelsen, a senior policy adviser at DLA Piper, a law and lobbying firm. “[Companies] are advocating…to avoid the types of policies that would really make it almost impossible to launch a drug in European countries.”

The World Health Organization has recommended the use of novel weight-loss drugs to curb soaring obesity rates, and urged pharma companies to lower their prices and expand production so that lower-income countries can also benefit. The WHO’s new treatment guideline includes a conditional recommendation to use the so-called GLP-1s — such as Wegovy, Ozempic and Mounjaro — as part of a wider approach that includes healthy diet, exercise and support from doctors. The WHO described its recommendation as “conditional” due to limited data on the long-term efficacy and safety of GLP-1s. The recommendation excludes pregnant women. While GLP-1s are a now well-established treatment in high-income countries, the WHO warns they could reach fewer than 10 percent of people who could benefit by 2030. Among the countries with the highest rates of obesity are those in the Middle East, Latin America and Pacific islands. Meanwhile, Wegovy was only available in around 15 countries as of the start of this year. The WHO wants pharma companies to consider tiered pricing (lower prices in lower-income countries) and voluntary licensing of patents and technology to allow other producers around the word to manufacture GLP-1s, to help expand access to these drugs. Jeremy Farrar, an assistant director general at the WHO, told POLITICO the guidelines would also give an “amber and green light” to generic drugmakers to produce cheaper versions of GLP-1s when the patents expire. Francesca Celletti, a senior adviser on obesity at the WHO, told POLITICO “decisive action” was needed to expand access to GLP-1s, citing the example of antiretroviral HIV drugs earlier this century. “We all thought it was impossible … and then the price went down,” she said.  Key patents on semaglutide, the ingredient in Novo Nordisk’s diabetes and weight-loss drugs Ozempic and Wegovy, will lift in some countries next year, including India, Brazil and China. Indian generics giant Dr. Reddy’s plans to launch a generic semaglutide-based weight-loss drug in 87 countries in 2026, its CEO Erez Israeli said earlier this year, reported Reuters. “U.S. and Europe will open later … (and) all the other Western markets will be open between 2029 to 2033,” Israeli told reporters after the release of quarterly earnings in July. Prices should fall once generics are on the market, but that isn’t the only barrier. Injectable drugs, for example, need cold chain storage. And health systems need to be equipped to roll out the drug once it’s affordable, Celletti said. 

LONDON — The U.K. has agreed to raise how much its National Health Service spends on new drugs, in a concession made under pressure from the Trump administration in return for tariff-free access to the U.S. market. “Today’s agreement is a major win for American workers and our innovation economy,” U.S. Commerce Secretary Howard Lutnick said in a statement on Monday. “This deal doesn’t just deepen our economic partnership with the United Kingdom — it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil.”  The deal will see Britain increase the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold by 25 percent, as POLITICO first reported in October, and slash the cap on revenue the NHS can reclaim from drugmakers to no more than 15 percent.  The new NICE threshold will be £25,000 to £35,000 per quality adjusted life year gained over and above current treatments. The U.S. said the combined changes would increase the net price the NHS pays for new medicines by 25 percent. In exchange, the administration will grant an exemption for U.K.-made pharmaceuticals, ingredients and medical technology from U.S. tariffs for the remainder of President Donald Trump’s term.  U.K. Business and Trade Secretary Peter Kyle said: “This deal guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences. “We will continue to build on the UK-US Economic Prosperity Deal, and the record-breaking investments we secured during the US State Visit, to create jobs and raise living standards as part of our Plan for Change.” The breakthrough comes after months of back-and-forth between both sides, with the sector not covered in the Economic Prosperity Deal and Washington demanding a “preferential environment” to lift the threat of steep import duties. The administration had threatened to impose up to 100 percent tariffs on drugs.  In July, the President issued a letter to 17 drugmakers, demanding they offer their drugs to Medicaid at most-favored-nation prices, prices tied to lower prices abroad, and shift manufacturing to U.S. soil.  Update: This story has been updated following confirmation from the U.S. and U.K. governments.

As trilogue discussions on the Critical Medicines Act (CMA) approach, its potential effects on medicine supply, patient access and Europe’s competitiveness are increasingly in focus. From an industry standpoint, several considerations are central to understanding how this act can best achieve its objectives and support a robust pharmaceutical ecosystem in Europe.  Keeping the CMA focused where it matters  Much of the debate around the CMA has centered on its promises to strengthen the availability and security of supply of critical medicines in the EU while improving accessibility to other medicines. These are goals that our industry fully supports.   The European Commission’s proposal is designed to focus on critical medicines, with a vulnerability assessment foreseen to identify which products are truly at risk of disruption and tailor solutions accordingly. Alongside critical medicines, the proposal also introduces a new definition of ‘medicinal products of common interest’. Under current wording, this would include any medicine unavailable in at least three member states, regardless of the underlying reason.   Such a broad definition risks turning a targeted framework for resilience into an all-encompassing mechanism covering almost every medicine on the market, blurring the distinction between supply and access challenges. These are fundamentally different issues that require fundamentally different policy tools.   > Applying the CMA’s tools across the entire medicines market would dilute > priorities, stretch healthcare budgets and create administrative burdens for > industry without delivering real benefits for patients.   The act will be far more effective if it remains focused on where the risks are greatest — in other words, by limiting the ‘medicinal products of common interest’ definition to cases of demonstrable market failure and directing measures toward genuinely critical medicines with a proven risk of supply disruption.  Fixing supply and access hurdles needs more than joint procurement   The CMA places joint procurement at the center of its strategy to address both supply and access challenges. While this approach can contribute to improving availability in certain circumstances, joint procurement will only deliver lasting results if it is designed to address the underlying causes of access delays and shortages, which vary across geographies and products.  For medicines where the main challenge lies in fragile supply chains, joint procurement can play a role, particularly when it enhances predictability and economic viability for suppliers. Experience from the Covid-19 pandemic has shown that coordinated purchasing can be effective in targeted situations. For medicines facing access delays, joint procurement could help improve availability in countries where genuine market failures exist. However, the value of joint procurement for countries where products are already available, or where access barriers can be better addressed by improving national pricing and reimbursement systems, is very questionable.  To ensure that joint procurement does not hinder access, several safeguards are essential. Tenders should reward quality and promote innovation, recognizing the value that innovative medicines bring to patients and society. Price confidentiality must be protected to prevent unintended spillovers, such as reference pricing effects. Once joint procurement agreements are concluded, to ensure commercial and supply predictability there should be no additional national renegotiations or expenditure control measures. Finally, allowing national procurement processes to run in parallel will be key to avoid delays and maintain flexibility.  Beyond these design safeguards, real progress will depend on tackling the broader root causes of shortages and access delays. For supply fragility, this means, among other actions, reducing strategic dependencies where necessary, improving transparency across supply chains and avoiding rigid national stockpiling rules. For access delays, progress will require addressing national pricing and reimbursement challenges, and a greater willingness from governments to reward the value that innovative medicines deliver.  Protectionism won’t make Europe stronger  Few elements of the CMA debate have attracted as much attention as the idea of prioritizing EU-made medicines. The rationale is straightforward: producing more within Europe is expected to reduce reliance on third countries, reinforce strategic autonomy and, ultimately, improve supply security. While this narrative is understandable, taking it at face value risks overlooking the realities of how medicines are manufactured and supplied today.  Europe already has one of the world’s strongest pharmaceutical manufacturing footprints and, unlike some other pharma manufacturing regions, Europe exports 71 percent of its pharmaceutical production. This output depends on global supply networks for active substances, raw materials and specialized technologies. Introducing local-content requirements or preferential treatment for EU-made products would disrupt those networks, fragment supply chains and drive up costs, with limited evidence that such measures would enhance resilience. Local-content requirements could also affect Europe’s trade relationships and weaken, rather than strengthen, its industrial base in the long term, while distorting competition within the single market and undermining the competitiveness of both European and international companies operating in Europe. The likely outcome would be less diversity and greater concentration in supply chains: the opposite of what a resilient system requires.  If procurement criteria referencing resilience or strategic autonomy are used, they should be proportionate and tied to clearly demonstrated dependencies or supply risks. Protectionist approaches, however well-intentioned, cannot substitute for the broader policy environment needed to keep Europe attractive for investment in research and development and manufacturing. A competitive European ecosystem depends first and foremost on predictable intellectual-property rules, timely regulatory processes, access to capital, and a strong scientific and technical skills base.  The EU institutions still have time to steer the CMA on course  The CMA offers a real chance to get things right. The European Parliament’s proposal for more consistent contingency stock rules could help if it stays focused on medicines genuinely at risk of shortage. The act can also make reporting more efficient by using existing systems rather than creating new ones. Policymakers should also be aware that wider regulatory initiatives directly affect Europe’s ability to manufacture and supply medicines. A more coherent policy framework will be essential to strengthen resilience.  Europe’s goal must be to build an environment where pharmaceutical innovation and production can thrive. Europe’s choice is clear: supply security cannot be achieved by weakening the industry that ensures it. The CMA will only work if it tackles the right problems with the right tools and keeps competitiveness at its core.   > Europe’s goal must be to build an environment where pharmaceutical innovation > and production can thrive. Our industry remains ready to engage with EU and national policymakers to make that happen. A high-level forum on the CMA involving all stakeholders could help guide the act’s implementation in a way that improves supply security and speeds up access for patients, while reinforcing Europe’s position as a global player in life sciences.  Disclaimer POLITICAL ADVERTISEMENT * The sponsor is European Federation of Pharmaceutical Industries and Associations (EFPIA) * The political advertisement is linked to the Critical Medicines Act More information here.

LONDON — American pharmaceutical giants will start to shutter their U.K. operations unless Keir Starmer’s government agrees to pay more for their drugs, U.S. Ambassador to the U.K. Warren Stephens warned ministers on Wednesday. “The U.K. needs to continue addressing its pricing structures for medicines to ensure it can compete for investment from U.S. firms,” Stephens told a U.K.-U.S. business gathering in central London attended by British trade and foreign ministers. “If there are not changes made, and fast, pharma businesses will not only cancel future investments, they will shut down their facilities in the U.K.,” the diplomat said. “This would be a major blow to a country that prides itself, rightly so, on its life sciences sector.”  The U.K. is locked in drug-pricing negotiations with the Trump administration and pharmaceutical firms about how much the National Health Service pays for their products through the so-called Voluntary Scheme for Pricing, Access and Growth (VPAG) scheme. Britain has offered to increase the threshold at which the NHS pays firms for medicines by up to 25 percent, POLITICO first reported in October. But pharmaceutical executives are pushing the government to go further. American drugmaker Eli Lilly’s international business chief said on Monday that it wants to see more changes to Britain’s medicine market before it pivots on its abandoned £279 million investment in a biotech incubator project. “I don’t think we have heard enough to say that we are willing to get the Lilly Gateway Lab started,” Patrik Jonsson, president of Lilly’s international business, which covers all markets outside the U.S., told POLITICO. The focus of talks has turned to the government’s “clawback” system, where firms have to pay back part of their revenue if the total amount the NHS spends on drugs rises above a certain cap. Unless ministers agree to also raise that cap, any extra NHS spending will mean a larger clawback bill for pharma companies. Pricing talks feature in the U.K.’s ongoing trade negotiations with Washington after Starmer struck a framework trade deal with Trump in May, promising to “improve the overall environment” for pharmaceutical firms operating in Britain. U.K. negotiators are currently in Washington and “progress is being made on this literally as we speak,” Stephens said, adding he hopes “that will yield some success.”  The U.K.’s “chief obstacle” to growth is also its high energy costs, Stephens added. “If there are not major reforms to U.K. energy policy, then the U.K.’s position as a premier destination in the global economy is vulnerable.”  Britain’s Labour government is “completely signed up to an ambitious agenda for business,” said Trade Minister Chris Bryant, in an address following Stephens’ speech. He set out how the government plans to “integrate” its industrial, small business and trade strategies to grow the economy.

LONDON — The American drugmaker Eli Lilly wants to see more changes to Britain’s medicine market before it pivots on its abandoned £279 million investment in a biotech incubator project. The U.K. government has drawn up proposals to increase the amount the state-funded National Health Service is allowed to pay pharmaceutical firms for drugs after intense discussions with officials from Donald Trump’s administration. The U.S. president has demanded lower drug prices for Americans, and suggested other developed countries should pay more. The British plans under consideration could increase the threshold at which the NHS pays firms for medicines by up to 25 percent. But for the U.S. pharmaceutical company — which shelved its planned facility meant to support early-stage life sciences businesses with lab space, mentorship and potential financial backing — the proposal alone is not enough. “I don’t think we have heard enough to say that we are willing to get the Lilly Gateway Lab started,” Patrik Jonsson, president of Lilly’s international business, which covers all markets outside the U.S., told POLITICO. “I think once we see the right signs from the U.K. government, we’re more than happy to restart those discussions, and we could move quite quickly,” Jonsson said. However, “we need to see some significant and sustainable change here.” The comments will be a blow to British negotiators, who are in advanced talks to agree their drug-pricing deal with the U.S. administration as part of wider trade negotiations. Officials are hoping to wrap up the pharma talks ahead of the U.K.’s budget in late November. Ministers last week granted a two-week extension to the deadline by which pharma firms must tell the government if they intend to leave the NHS’s voluntary drug pricing scheme. If Washington and London strike a deal — effectively committing the NHS to higher drug spending — Chancellor Rachel Reeves will face pressure to spell out how much the increase will cost taxpayers. ‘WE NEED THE RIGHT CONDITIONS’ Drugmakers have long called for changes to the U.K.’s tightly-controlled drug prices. Britain limits the annual cost for a year of good-quality life (QALY) for a patient at £30,000 for most drugs. Industry also pays an annual rebate to the NHS at 23 percent of their U.K. sales. These measures have contained the medicine bill for the U.K.’s publicly-funded health care system. While Jonsson acknowledged the U.K. is “well positioned to be a source of innovation” thanks to a “small but really impressive group of scientists,” he said the country needs to demonstrate sustained changes. The British plans under consideration could increase the threshold at which the NHS pays firms for medicines by up to 25 percent. | Anna Barclay/Getty Images “At the end of the day if you want us to research, develop and produce medicines in your country you need to put the right conditions in place so that your citizens can get access to those patients at least who need it most,” Jonsson said. An editorial in the Lancet medical journal last week said “the argument that paying more for medicines leads to more innovation is unfounded.” “If the U.K. Government wants to attract pharma investment, it should follow the evidence. Rather than handing over more money for medicines, it should invest in creating fertile conditions for attracting world-leading scientists, boosting public infrastructure for research and development, and facilitating clinical trials,” the article states. “Although the tangible outcomes of applied research might appeal to politicians, investing massively in a second-to-none basic science sector will allow scientific innovation to flourish.” Jonsson was speaking to POLITICO as the company announced a €2.6 billion new manufacturing facility in the Netherlands to produce oral medicines, including its first GLP-1 weight-loss pill. A Department of Health and Social Care spokesperson said: “We will always prioritise the needs of NHS patients. Investment in patient access to innovative medicines is critical to our NHS. “We are now in advanced discussions with the US Administration to secure the best outcome for the UK, reflecting our strong relationship and the opportunities from close partnership with our pharmaceutical industry,” the spokesperson added.

The European Commission is set to unveil the Biotech Act I, an EU cardiovascular health plan and a simplification of the bloc’s medical devices and in vitro diagnostics rules on Dec. 16, according to the latest Commission agenda published Monday. The first part of the Biotech Act will focus on the pharmaceutical industry and is being produced without a dedicated impact assessment. The second part — covering other biotech sectors — is expected in the third quarter of 2026. The upcoming cardiovascular health plan — inspired by the bloc’s Beating Cancer Plan — will cover prevention, early detection and screening, treatment and management, and rehabilitation. Meanwhile, simplification of the bloc’s medical devices and in vitro diagnostics rules comes after the regulations drove up assessment costs, caused certification delays, and led to product withdrawals from the market. Europe’s Health Commissioner Olivér Várhelyi has previously said the sector needs a “major overhaul.” Additionally, the Commission’s agenda includes a “drugs package” comprising new rules on drug precursors and an EU Drugs Strategy and European action plan against drug trafficking — both scheduled for Dec. 3.

Opponents of President Donald Trump’s “Liberation Day” tariffs are finally getting their day in the U.S. Supreme Court. And while the justices may not rule for some time, their lines of questioning could offer hints about which way they are leaning in the blockbuster case. On Wednesday, the high court will hear from the plaintiffs — a dozen Democratic-run states and two sets of private companies — and the Trump administration. Each side will have 40 minutes to make their arguments and then get peppered with questions from the nine justices. The court then has until the end of its term next July to issue a ruling, although some of the lawyers who brought the initial cases hope it will move faster given the real-world impact the decision will have. “It’s very reasonable to expect that this will be decided before the end of the year, if not much, much more before that,” said Jeffrey Schwab, senior counsel at the Liberty Justice Center, a constitutional rights law firm representing companies in the case.  Advertisement Three federal courts have ruled against Trump’s use of a 50-year-old emergency law to impose broad “reciprocal” duties that he then deployed to strike trade deals with the EU, Japan and other partners. The case does not address sectoral tariffs on products like steel, aluminum or autos, which have also been part of negotiations, but were imposed under a different legal authority that is not in dispute. If the Supreme Court rules that the tariffs Trump announced in April are illegal, will those deals fall apart? We analyze the risks: -------------------------------------------------------------------------------- United States European Union United Kingdom China Canada Mexico -------------------------------------------------------------------------------- UNITED STATES Risk assessment: Many legal experts think there is a strong chance the Supreme Court will strike down the duties that Trump imposed under the International Emergency Economic Powers Act (IEEPA), a 1977 sanctions law that empowers Trump to “regulate” imports but does not specifically authorize tariffs. Not all agree, arguing the conservative-led court is likely to back the Trump administration’s view that the president has broad authority to conduct foreign affairs and that imperative  outweighs any concerns about executive branch overreach that the court has expressed in previous cases. Coping strategy: In the worst-case scenario for the administration, the Supreme Court would strike down all the duties and order it to repay hundreds of billions of dollars in duties paid by companies and individuals.  But even in that scenario, Trump may be able to use other authorities to recreate the tariffs, including Section 122 of the 1974 Trade Act. That provision could allow the president to impose a 15 percent global import “surcharge” for up to 150 days, according to the Cato Institute, a libertarian think tank. Trump would have to get congressional approval to keep any Section 122 tariffs in place for longer — a tall order even in a Republican-led Congress. However, he might be able to use the provision as a stopgap measure while he explores other options.  Those include Section 301 of the 1974 Trade Act, which he used in his first term to impose extensive tariffs on Chinese goods and recently deployed against Brazil. Unlike IEEPA, which Trump believes merely allows him to declare an international emergency to impose tariffs, Section 301 requires a formal investigation into whether the United States has been harmed by an unfair foreign trade practice.  However, Trump could also just use those investigations — and the implied threat of tariffs — to pressure trading partners like the EU into reaffirming the trade deals they have already struck with him.  Trump could also launch additional sectoral investigations under Section 232 of the 1962 Trade Expansion Act, a provision that allows the president to restrict imports determined to pose a threat to national security. He has employed that measure in his first and second term to impose duties on steel, aluminum, autos, auto parts, copper, lumber, furniture and heavy trucks. In one variation, he’s used an ongoing investigation into pharmaceutical imports to pressure companies to invest more in the United States and to slash drug prices. He has also used the threat of semiconductor tariffs to prod countries and companies into concessions, without yet imposing any duties. The Commerce Department has other ongoing Section 232 investigations into processed critical minerals, aircraft and jet engines, polysilicon, unmanned aircraft systems, wind turbines, robotics and industrial machinery, and medical supplies. And, as Trump’s lumber and furniture duties demonstrate, the administration’s expansive definition of national security provides it with broad leeway to open new investigations into a variety of sectors. By Doug Palmer Back to top -------------------------------------------------------------------------------- EUROPEAN UNION Risk assessment: The European Union isn’t counting on the Supreme Court to save it from Trump’s 15 percent baseline tariff — knowing full well that if U.S. tariffs don’t come through the front door, they’ll come through the window. “Even a condemnation or a ruling by the Supreme Court that these reciprocal tariffs are illegal does not automatically mean that they fall,” the EU’s top trade official, Sabine Weyand, told European lawmakers recently. “There are other legal bases available.” Trump invoked IEEPA to impose the baseline tariff on the 27-nation European bloc. But Brussels is more worried about sectoral tariffs that Trump has imposed on pharmaceuticals, cars and steel using other legal avenues — chiefly Section 232 investigations — that aren’t the subject of the case before the Supreme Court. Advertisement Coping strategy: Brussels is in full damage-control mode, trying not to stir the pot too much with Washington and focusing on implementing the deal struck by European Commission President Ursula von der Leyen at Trump’s Turnberry golf resort in Scotland in July — and baked into a bare-bones joint statement the following month.  Crucially, the EU asserts that it has locked in an “all-inclusive” tariff of 15 percent on most exports — so even if the Supreme Court throws out Trump’s universal tariffs it would argue that the cap should still apply. “Even if all IEEPA tariffs are eliminated, the EU would have an interest in keeping the deal,” Ignacio García Bercero, who used to be the Commission’s point person for its trade talks with the U.S., told POLITICO. The Commission is also still in negotiations with the Trump administration to secure further tariff exemptions for sensitive sectors such as wines and spirits.  The European Parliament, which will need to approve the Turnberry accord, is taking a more hawkish line over what many lawmakers have criticized as the one-sided trade deal with the U.S.: It wants to add a “sunset” clause that would effectively limit the EU’s trade concessions to Trump’s term in office. EU countries have given that idea the thumbs down, however, saying deals that have been agreed must be respected. The EU has invited Commerce Secretary Howard Lutnick to a meeting of its trade ministers in Brussels on Nov. 24. The focus there will be on reassuring him that the legislation to implement the trade deal will pass, and on fending off U.S. charges that EU business regulation is discriminatory. By Camille Gijs Back to top -------------------------------------------------------------------------------- UNITED KINGDOM Risk assessment: Should the Supreme Court strike down Donald Trump’s universal tariffs, Britain won’t be off the hook. London may have secured a favorable, 10 percent baseline rate with Washington back in May — but that only goes so far.   That protection does not extend to Trump’s Section 232 steel and auto levies, which remain in place. Under the current deal, Britain gets preferential tariffs on its car exports, as well as a 50 percent reduction to the global steel tariff rate.  If Britain tried to renegotiate its baseline tariffs, the U.S. could quickly retaliate by withdrawing those preferential deals, and take a harder line in ongoing negotiations covering pharma and whisky tariffs. Coping strategy: The U.K. is pressing ahead with its negotiations with the Trump administration on other parts of the deal — despite the ongoing court case. British officials fly out to D.C. in mid-November to push forward talks, shortly before Trade Representative Jamieson Greer is due in London on Nov. 24. “I don’t think the U.K. or others would attempt to renegotiate in the first instance — we might even see some public statements saying we plan to honour the deal,” said Sam Lowe, British trade expert and partner at consultancy firm Flint Global. “There’s too much risk in trying to reopen it in the first instance, given it could antagonise Trump.” Meanwhile the U.K. is seeking to strengthen its trade ties with other nations. It struck a free trade agreement with India over summer, is renegotiating aspects of its trading relationship with the European Union and hopes to close a trade deal with a six-nation Gulf economic bloc including Saudi Arabia and the United Arab Emirates in the coming weeks. The U.K. is expected to maintain its current deal with the U.S., even if legal challenges were to weaken Trump’s wider tariff regime. By Caroline Hug Back to top -------------------------------------------------------------------------------- CHINA Risk assessment: Chinese leader Xi Jinping exited his meeting with Trump in South Korea last week with a U.S. commitment to cut in half the 20 percent “emergency” tariff imposed in March to punish Beijing for its role in the U.S. opioid epidemic. A possible ruling by the Supreme Court that overturns the residual “emergency” tariffs on Chinese imports — the remainder of the fentanyl tariff and the 10 percent “baseline” levy added in April — would leave Beijing with an average 25 percent tariff rate. The judges will test the administration’s position that its IEEPA tariffs are legally sound because they constitute a justified regulation of imports. But a blanket ruling on the levies on Chinese imports isn’t guaranteed. “The Supreme Court is likely to make a binary ruling — the court might decide the trade deficit tariffs are illegal, but the fentanyl tariffs are lawful,” said Peter Harrell, former senior director for international economics in the Joe Biden administration. The Chinese embassy declined to comment on how Beijing might respond to a SCOTUS ruling in China’s favor. But it would mark a symbolic victory for the Chinese government whose Foreign Minister Wang Yi has described them as an expression of “extreme egoism.”    Coping strategy: Celebration in Beijing about a possible revocation of any of these tariffs may be short-lived. That’s because Trump can wield multiple other trade weapons even if the Supreme Court deems the tariffs unlawful. His administration signaled that it’s priming potential replacements for the IEEPA tariffs with the Office of the U.S. Trade Representative’s announcement last week of Section 301 probes of Beijing’s adherence to the U.S.-China Phase One trade deal in Trump’s first term. It is also undertaking Section 232 probes — geared to determine national security threats — of Chinese-dominated imports including pharmaceuticals, critical minerals and wind turbines. “There’s ample opportunity for the Trump administration to use other legal instruments in the event that the IEEPA tariffs get struck down,” said Emily Kilcrease, a former deputy assistant U.S. trade representative during Trump’s first term and under Biden. The 301 investigation into the Phase One deal is already active, and “will allow them to be fairly quick in responding in the event that the Supreme Court rules against the administration,” Kilcrease said at a Center for a New American Security briefing. By Phelim Kine Back to top -------------------------------------------------------------------------------- CANADA Risk assessment: It’s a bit of a lose-lose situation for Canada.  Trump pre-emptively blamed a Canadian provincial government for weaponizing Ronald Reagan in an ad to influence the SCOTUS ruling. The 60-second spot launched on U.S. networks on Oct. 16 to bring an anti-trade war message to Republican districts rather than to nine Supreme Court justices. It riled Trump enough that he ended trade talks eight days later. Then he vowed to increase tariff levels by 10 percent in retribution. If the court sides with Trump, it will justify an impulse to use IEEPA to raise rates higher without a need for findings or an investigation. And if the court rules against the president — Ottawa will have to prepare for more of Trump’s fury over the ad. The U.S. increased the IEEPA tariff rate on Canada to 35 percent from 25 percent in July, citing a failure to crack down on fentanyl trafficking across the northern border. This 35-percent rate excludes the promised 10-percent retributive increase — an executive order hasn’t been released. It’s unclear which legal authority Trump will use if his stated reasoning is to punish Canada over an ad about Reagan’s warning about protectionism.  Advertisement Prime Minister Mark Carney has called the IEEPA tariffs “unlawful and unjustified.” And he’s been able to play down the threat, for now, by reminding Canadians that these “fentanyl tariffs” have a carve-out for goods covered under the United States-Mexico-Canada Agreement (USMCA). Carney regularly says 85 percent of Canadian exports enter the U.S. tariff free. Section 232 tariffs on industry have hit the economy harder than the IEEPA tariffs. Coping strategy: Canada is frantically pursuing trade diversification coupled with a high-level charm offensive while its trade negotiators try to limit the scope of the upcoming review of the USMCA to minimize U.S. tariff exposure. “Our priorities are to keep the review as targeted as possible, to seek a prompt renewal of the agreement, while securing preferential market access and a stable and predictable trading environment for Canadian businesses and investors,” Canadian Ambassador to the U.S. Kirsten Hillman recently told a parliamentary committee. Carney has, meanwhile, apologized to Trump for the Reagan ad. By Zi-Ann Lum Back to top -------------------------------------------------------------------------------- MEXICO Risk assessment: Trump has hit Mexico, the largest U.S. trading partner, with multiple tariffs since taking office. Those include a 25 percent duty imposed under IEEPA to pressure the country to do more to stop fentanyl and precursor chemicals — as well as illegal immigrants — from entering the United States.  Trump softened the blow by excluding goods that comply with terms of the U.S.-Mexico-Canada Agreement from the new IEEPA duties. That has encouraged more and more companies to fill out paperwork to claim the exemption.  About 90 percent of Mexican goods entering the U.S. now have the necessary USMCA documentation, compared to around 60 percent last year, said Diego Marroquín, a fellow in the Americas program at the Center for Strategic and International Studies. Still, U.S. customs officials report collecting $5.7 billion in IEEPA duties on Mexican goods between Mar. 4 and Sep. 23, according to the most recent data available. Trump also has threatened to raise the IEEPA tariff on Mexico to 30 percent, but reportedly recently agreed to delay that move for several more weeks to allow time for talks. Coping strategy: President Claudia Sheinbaum has stayed on Trump’s good side by declining to retaliate and working with the U.S. on fentanyl and illegal immigration concerns. She has kept that forbearance while Trump has piled new tariffs on Mexico’s exports of autos, auto parts and certain other products using Section 232. Mexico’s ultimate goal is to maintain the preferential access it enjoys to the U.S. market under the USMCA, which is up for review next year, when countries have to say if they want to continue the pact past July 1, 2036, its current expiration date.  Sheinbaum told reporters on Oct. 27 that she hopes to resolve U.S. concerns over 54 Mexican non-tariff trade barriers in coming weeks. While a return to tariff-free trade with the U.S. seems unlikely while Trump is in office, Mexico hopes to be treated better than most other trading partners, or at least no worse. That drama will play out in the first half of 2026. By Doug Palmer Back to top -------------------------------------------------------------------------------- Doug Palmer and Phelim Kine reported from Washington, Camille Gijs from Brussels, Caroline Hug from London and Zi-Ann Lum from Ottawa. Advertisement