What has been the impact of US tariffs thus far on global trade, including on pharmaceuticals and pharmaceutical ingredients? Plus, Switzerland is the latest country to strike a new tariff deal.  

By Patricia Van Arnum, Editorial Director, DCAT, pvanarnum@dcat.org

US tariffs and trade: results thus far
Tariff/trade policy in the US has been the story of the year, but for all the focus given to tariffs, what has been the impact of them globally and in the US? The rationale beyond imposing tariffs on a US policy level was to reduce the US trade deficit, but has that been the case? The short answer is yes and no. A report issued this week (November 19, 2025) by the US Census Bureau and the US Bureau of Economic Analysis showed that the US trade deficit fell by nearly 24% to $59.6 billion in August (August 2025) from $78.2 billion in July (July 2025). August exports were $280.8 billion, $200 million more than July exports, and August imports were $340.4 billion, $18.4 billion less than July imports. On face value, lower imports may seem to be a positive in improving the position of the US in trade, but analysts say the lower imports reported in August are more likely the result of US companies importing less after having earlier stockpiled goods with looming tariffs. However, the August numbers were significant in that they followed the imposition of reciprocal tariffs or country-by-country tariffs that largely were announced in August. With August being the first month seeing the effect of reciprocal tariffs, a key question is whether the US trade deficit will continue the trajectory and again decline.

The Trump Administration first laid out a plan for imposing reciprocal tariffs in February (February 2025) to counter non-reciprocal trading arrangements with US trading partners and to improve US competitiveness, including in manufacturing. Those reciprocal tariffs were scheduled to go into effect on April 9, 2025, but the Administration placed a 90-day pause (until July 9, 2025) on their implementation to enable countries to negotiate these tariffs with the US government. The US government then extended the deadline again, to August 7, 2025, except for certain countries, which were sent letters from the White House that specified their tariffs, as the US government continued to negotiate individual deals with its trading partners. Since that time, the US has struck deals/framework agreements with key trading partners of particular relevance to the pharmaceutical industry, including the European Union, the UK, Switzerland, Japan, China, and India. For pharmaceuticals, US imports of pharmaceutical preparations decreased by $700 million in August (August 2025), and US exports of  pharmaceutical preparations increased by $1.2 billion in August.

The monthly improvement in August in US trade numbers, however, was not enough to counter an overall widening US trade deficit thus far in 2025. Overall, the US trade deficit increased by $142.5 billion to $713.6 billion from January–August 2025, a 25% increase from $571.1 billion in January-August 2024. Exports increased $108.4 billion or 5.1%, and imports increased $250.9 billion or 9.2%. The release of the September trade data has yet to be determined as the US Census Bureau and the US Bureau of Economic Analysis work to update their respective schedules of economic releases, which were affected by the US government shutdown. Data on the performance of the US economy and the impact that tariffs may or may not have had are also on delay as the release of the report on third-quarter 2025 gross domestic product (GDP), originally scheduled to be released next week (November 26, 2025), will also be delayed to a still-to-be-determined date.

With the uncertainty in trade, in its latest World Economic Outlook report issued last month (October 2025), the International Monetary Fund (IMF) projects that global growth will slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, with advanced economies growing around 1.5% and emerging market and developing economies just above 4%. Inflation is projected to continue to decline globally, though with variation across countries: above target in the United States—with risks tilted to the upside—and subdued elsewhere.

Tariffs: New deal with Switzerland, other updates
In the latest tariff deal, the US and Switzerland are working toward implementing ​a reduction in US tariffs ‌on Switzerland to 15% from 39% after the countries reached a preliminary agreement ‌earlier this month (November 14, 2025). The 39% tariff imposed on Switzerland by the Administration earlier in 2025 had been the highest among European countries; the 15% now puts the tariff on Switzerland in line with the rate imposed on the European Union. As part of the deal, Swiss companies have pledged to invest approximately $200 billion in the US by the end of 2028.

“The announcement of the reduction in additional US tariffs on Swiss imports will serve to stabilize bilateral trade relations,” said the Swiss government in a November 14, 2024, press statement. “Although overall tariffs remain higher than before the additional tariffs were introduced in April, the agreed reduction in additional tariffs is expected to have a positive impact on the Swiss economy.

The deal with Switzerland on reciprocal tariffs comes as the US Supreme Court evaluates the legality of the Administration to impose such tariffs under executive action. The US Supreme Court heard oral arguments earlier this month (November 2025) in two cases to decide whether the current Administration has the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which was used to impose reciprocal tariffs on a country-by-country basis. Hearing oral arguments is only the first step in the Supreme Court process as it reviews and considers these cases. Until a decision is reached, the reciprocal tariffs remain in place. A ruling is expected in the coming months.

A key legal question is in interpreting IEEPA and that was raised by the US Supreme Court Justices in hearing oral arguments is whether the authority granted to the President, under a national emergency, under IEEPA to “regulate … importation or exportation” translates to the authority to impose tariffs. In taking executive action to impose reciprocal tariffs, the Administration did so in citing that large US trade deficits constituted an economic and national security threat. The Administration contends that under IEEPA, which provides the President the legal authority to regulate importation, it has the authority to “regulate importation” through the imposition of tariffs, which is one of the key legal issues to be addressed by the Supreme Court.

As that process evolves, several scenarios are important to note. If the Supreme Court were to strike down reciprocal tariffs, the Administration could pursue other statutes in framing a legal argument to support its authority to impose reciprocal tariffs and pursue litigation under those measures. The Administration could also move to work with Congress to impose tariffs as the legal question around the imposition of reciprocal tariffs relates to the balance of power–Congressional versus Presidential authority–to impose revenue-raising measures. Congress holds the Constitutional authority to “lay and collect taxes, duties, imposts and excises,” but also has exercised its authority to delegate some of its tariff-setting authority to the President through specific legislation, such as the Trade Act of 1974 or the Trade Expansion Act of 1962, to allow the President to impose tariffs under specific conditions and for defined periods, often related to national security or unfair trade practices. Another scenario relates to whether if reciprocal tariffs were not upheld by the US Supreme Court, would the revenues raised from them have to be reimbursed to the parties that have paid these tariffs thus far.

Pharmaceutical industry tariffs
The legal question over reciprocal tariffs is separate from executive authority to impose industry-specific tariffs, which are under consideration by the Administration for the pharmaceutical industry. The groundwork for potential industry-specific tariffs was laid earlier this year (April 1, 2025), when the US Department of Commerce initiated an investigation to determine the effects on US national security of imports of pharmaceuticals and pharmaceutical ingredients. The statutory authority for such an investigation comes under Section 232 of the Trade Expansion Act of 1962, as amended, which allows the President to impose import restrictions based on an investigation and affirmative determination by the US Department of Commerce that certain imports threaten to impair US national security. The time frame for this process would require any actions to be taken by the end of this year (2025).

In the meantime, the Trump Administration has struck deals with individual pharmaceutical companies to provide a three-year exemption for Section 252 tariffs in return for commitments for increasing capital investment in the US and agreeing to reduce drug prices for certain products as outlined in the individual company agreements to be in line with the Administration’s policy interest for most-favored-nation drug pricing. The premise behind most-favored-nation drug pricing is that the US pays higher prescription drug costs comparative to other developed countries and therefore assumes a larger share of the costs of drugs and that measures should be taken to reduce the differential in the prices of prescription drugs in the US compared to other developed countries, where prescription drug prices are lower. The individual company agreements with the Administration have included deals with Pfizer, AstraZeneca, Eli Lilly and Company, and Novo Nordisk.

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