This week in trade ended with another tariff announcement from US president Donald Trump, who introduced 100% rates on branded drug imports, with other furniture and vehicle levies close behind.
Also this week, Chinese president, Xi Jinping, continued to try and position himself as a leader on the world stage, using both trade and climate to signal a commitment to global cooperation and multilateralism.
The big picture: The latest salvo in Trump’s tariff blitz came yesterday (25 September), with 100% rates set to be applied to branded drug imports from 1 October, according to a post from the president’s Truth Social account.
The move could harm European pharmaceutical firms, who own the patents for several drugs, selling them under recognisable “brand” names.
Firms based in the EU have been subject to 15% tariff rates following this month’s implementation of a deal with the US. Whether or not Trump will honour the ‘no stacking’ clause in that agreement, preventing additional tariffs being applied, is unclear.
Switzerland, a major pharmaceutical player, is subject to 39% tariffs from the US, although its drugs were previously exempted.
The UK exported over £4.5bn worth of pharmaceutical products to the US last year, with a government spokesperson saying: “we've been actively engaging with the US and will continue to do so over the coming days”.
Unlike the EU, the UK’s tariff deal doesn’t contain a ‘no stacking’ clause, making export vulnerable to 100% rates.
In order to avoid the new duties, firms must be in the process of building manufacturing capacity in the US. In his social media post, Trump said ‘building’ would be defined as either “‘breaking ground’ and/or ‘under construction’”.
Experts have warned that the tariffs could severely inflate drug prices in the US – contrary to Trump’s pledge to reduce costs for Americans. Pascal Chan, vice-president for strategic policy and supply chains at the Canadian Chamber of Commerce, warned the tariffs could lead to “immediate price hikes, strained insurance systems, hospital shortages and the real risk of patients rationing or foregoing essential medicines.”
Good week/bad week: A glimmer of hope for UK auto-manufacturer Jaguar Land Rover (JLR), as some of its IT systems are reported to be back online following a cyberattack revealed earlier this month.
This comes as the government announced it would consider buying small components to support the firm’s supply chain, which is comprised of many small firms that rely on work from JLR to stay in business.
Production has been down across its three UK manufacturing sites since the attack. Typically, JLR builds 1,000 cars per day – the downtime is estimated to be costing the company £50m per week.
Not such good news for furniture makers wishing to export to the US. Trump’s tariff updates yesterday included a 30% rate on upholstered furniture and a 50% rate on kitchen and bathroom cabinets. Heavy trucks were also subject to a new levy of 30%.
How’s stat? 3.2%. That’s the Organisation for Economic Co-operation and Development’s (OECD) prediction for annual global GDP growth this year – revised upwards from June’s 2.9% projection, but still a reduction on the 3.3% recorded last year.
The OECD’s Economic Outlook Interim Report credited trade’s resilience in the first half of the year, ahead of Trump tariff’s going into effect as partly responsible. However, it also noted that US protectionism is having a widespread effect on a number of economies globally, including stalling disinflation and putting pressure of labour markets.
You can read the full report here.
The week in customs: The EU’s Deforestation Regulation (EUDR) has been delayed for a second time, with implementation pushed back a year from its intended start date this December.
Amid challenges around securing the relevant geolocation data from their suppliers, a number of food and drink traders at this week’s Lunchtime Learning webinar welcomed the reprieve.
Quote of the week: “The international community should stay focused on the right direction… [Countries] must live up to their responsibilities. The rights of developing countries must be fully respected.”
Chinese president Xi Jinping, speaking on climate change goals at the UN General Assembly in New York. China’s new emission targets received a mixed response from climate experts.
The remarks were widely regarded as a critique of Trump’s US administration. Amid US isolationism, Xi has made several bids to present himself as a global leader, advocating for multilateralism in international relations.
Earlier this week, he said China would be willing to cede its ‘Special and Differential Treatment’ in trade negotiations within the WTO. This treatment is conferred on developing nations, with large economies like China and Saudi Arabia privy to the benefits, despite their growth since first entering the forum – a point of tension in recent years.
What else we covered this week: We brought our members the latest news from the world of export controls, with live reporting from the Defence Export Conference in London.
There’s being insights from our sectoral Special Interest Groups this week too, including sessions on food and drink, manufacturing and borders.
There was also reflection on the Liberal Democrat party conference from our UK public affairs team who attended the Bournemouth event, Grace Thompson and Oliver Greensmith.
True facts: Today is National Alpaca Day, apparently. The perfect time to consider the cuddly camelid’s contribution to world trade.
An estimated 70% of the world’s alpaca’s live in Peru, which is the world leader in trading their wool – a thankfully cruelty-free practice. The country sends 85% of its product overseas, to the tune of over US$200m in 2023.
However, the Guardian reported the industry is under threat from climate change.
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