{"id":85,"date":"2026-07-08T13:00:07","date_gmt":"2026-07-08T13:00:07","guid":{"rendered":"http:\/\/913f2c58-5c3e-49ed-9dfc-17873b46a4e2"},"modified":"2026-07-08T13:00:07","modified_gmt":"2026-07-08T13:00:07","slug":"trumps-drug-price-crusade-puts-europe-on-guard","status":"publish","type":"post","link":"https:\/\/affairs360.com\/index.php\/2026\/07\/08\/trumps-drug-price-crusade-puts-europe-on-guard\/","title":{"rendered":"Trump\u2019s drug price crusade puts Europe on guard"},"content":{"rendered":"\n
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This article is an on-site version of our Trade Secrets newsletter. Premium subscribers can sign up here <\/a>to get the newsletter delivered every Monday. Standard subscribers can upgrade to Premium here<\/a>, or explore<\/a> all FT newsletters<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

Welcome to Trade Secrets. Last week, following the meeting of EU member states two weeks ago on dealing with China, trade commissioner Maro\u0161 \u0160ef\u010dovi\u010d met his Chinese counterpart Wang Wentao. The outcome? A promise to address the trade issues including the deficit in some vaguely specified<\/a> way by October. In a column just before that EU meeting I reported on a war-gaming exercise<\/a> I\u2019d taken part in on a trade showdown between the EU and China. And how did it end? China comprehensively won and gave nothing more than a woolly promise for a plan in two months\u2019 time. (I\u2019m not talking my book here: I was on the team playing the European Commission.) Uncanny. I strongly predict nothing substantive will happen in October either. Today\u2019s main pieces are on the return of pharmaceuticals pricing as a US trade priority and the USMCA imbroglio. Charted Waters<\/strong>, where I look at the data behind world trade, is on European stock prices.<\/p>\n

Me and the pharma<\/h2>\n

(It\u2019s a song.)<\/a> Time was when pharmaceutical pricing was right up in the top three or five at least of contentious topics whenever the US tried to close a trade deal. Some may forget this, but the Asia-Pacific CPTPP deal (then just \u201cTPP\u201d) stalled in Congress in 2015-16 before Donald Trump killed America\u2019s participation in 2017. One big reason was a dispute over how long the creators of biologic drugs could retain clinical trial data to prevent biosimilar versions being made.<\/p>\n

Under Joe Biden, thanks to his administration\u2019s affinity with campaign groups such as Public Citizen, sworn enemies of the pharma industry, the slavish support eased off. His administration even pretended to support a move to waive patents for Covid-19 vaccines at the WTO before it became clear it was just for show.<\/p>\n

Anyway, pharma\u2019s back, and Trump has a plan to push up drug prices abroad to compensate companies for driving them down in the US. This is going to be a nice little test of foreign governments\u2019 ability to resist him and particularly their ability to act collectively. He\u2019s started a Section 301 unfair trade investigation<\/a> of Germany, which boldly decided this was a good time to launch a new procurement policy pushing drug prices down, a pretty gutsy thing to do for a country with its own big pharma industry. The EU doesn\u2019t have a bloc-wide pricing or procurement policy \u2014 developing the Covid vaccine involved breaking a lot of new ground \u2014 but a bunch of smaller EU countries including Belgium, the Netherlands and Ireland have got together<\/a> and sounded the bugles of defiance across the Atlantic.<\/p>\n

Who knows how this will end up, but it looks like the right negotiating strategy at least. Get out in public saying what you\u2019re going to do and act in concert with others if you can, which makes it politically easier to resist pressure.<\/p>\n

Or you could do what the UK has done, which is to succumb to a pincer movement of lobbying like a gang of absolute amateurs. On one side, the pharma companies threatened to disinvest from Britain if prices didn\u2019t rise. On the other, the US administration forced Sir Keir Starmer\u2019s government under pain of tariffs to agree to raise domestic prices in one of those absurd trade deals written on a metaphorical napkin while being threatened by a figurative gunboat.<\/p>\n

This commitment could have a serious impact<\/a> on drug availability and public health. As David Henig of the ECIPE think-tank correctly points out in a good thread here<\/a>, this is exactly what you get when you make trade policy in secret. You can\u2019t use public opinion as an excuse to reject foreign governments\u2019 demands (\u201cwe couldn\u2019t get this through if we wanted to, just look at the demos in the streets\u201d). Instead you\u2019re left feebly trying to hope the voters and parliament don\u2019t notice. The UK government now claims it was always a brilliant strategy to strengthen pharma production in Britain, strongly reminiscent of when my cat falls off a sofa and pretends she meant it all along.<\/p>\n

It\u2019s not as if they weren\u2019t forewarned. Here I am writing about the threat twelve years ago<\/em><\/a>. The lack of outcry in Britain is quite striking. There were big protests<\/a> in the UK in the mid-2010s about the much more theoretical threat to the NHS from the abortive transatlantic TTIP trade deal, which supposedly would force the UK to accept private US healthcare providers. Maybe the health unions felt threatened by that in a way they don\u2019t by drug prices. Anyway, for any government wondering how to deal with the Trump pharma threats, don\u2019t do what the UK did.<\/p>\n

It\u2019s fun to stay in the USMCA<\/h2>\n

(It\u2019s a song.<\/a>) My contention that the Trump trade policy is largely a job creation scheme for trade negotiators, journalists and consultants got another boost last week when the US announced that it wouldn\u2019t be extending the USMCA trade deal aka CUSMA<\/a>, ACEUM<\/a> \u2014 my favourite name for some reason \u2014 and T-MEC<\/a>.<\/p>\n

Simon Lester of World Trade Law sets out<\/a> exactly what that means. It\u2019s not that the deal is dead, nor that it\u2019s necessarily automatically going to expire, but that the Trump administration wants to force changes in it before agreeing to extend.<\/p>\n

The statement<\/a> from US trade representative Jamieson Greer reiterated one of the administration\u2019s main concerns, the deficit it runs with both partners. In the past it has (relatedly) complained that too much of the supply chain, particularly for autos, is located in the US, suggesting that rules of origin need to be tightened once again, and about labour standards not being properly adhered to.<\/p>\n

It\u2019s certainly the case that the other two members want the deal to continue. As I wrote recently<\/a>, whatever Canadian Prime Minister Mark Carney says about building a post-US global trading system based on the middle powers, he\u2019s also extremely cognisant of the reality that diversifying from trade with the US will take a very long time. Canada\u2019s minister was almost embarrassingly effusive<\/a> about the deal last week. Mexico\u2019s trade minister Marcelo Ebrard also sounded positive<\/a>, though pointed out that T-MEC rules of origin were among the most stringent in the world and he couldn\u2019t see what more they could do.<\/p>\n

The fundamental problem is that the US wants to do things with the USMCA that are either very hard to do (I link again here to Trade Secrets favourite Desir\u00e9e LeClercq\u2019s definitive piece<\/a> on the Rapid Response Mechanism, which was intended to enforce high labour standards) or outright contradictory (eliminating trade deficits with trade policy). The supply chain platform Altana, which has a contract<\/a> on forced labour with US Customs and Border Protection and the Department of Homeland Security, says its panel of experts<\/a> identified transshipment and the value of inputs from outside North America as the weakest parts of the deal.<\/p>\n

In the absence of an actual plan, we have to assume that keeping it up in the air is itself tactical, perhaps using the threat of killing it as a perpetual threat to coerce Canada and Mexico into doing whatever the US wants. In the meantime, tethered though Canada and Mexico remain to the US, this creates an incentive for them to continue diversifying, with further moves on electric vehicles being an obvious area.<\/p>\n

Charted waters<\/h2>\n

The resilience of US stock prices to the trade war and Trump more generally has been impressive, but in relative terms European stocks have outperformed<\/a>, including in local-currency terms. To the extent the trade war has affected markets, it has hit the aggressor more than the victim.<\/p>\n

\"Line<\/picture><\/figure>\n

Trade links<\/h2>\n

Bloomberg reports<\/a> on China calling for unimpeded passage through the Strait of Hormuz, while chatter mounts about a toll system. You have to admit that would be very funny.<\/p>\n

A former Biden economic adviser argues<\/a> that the US cannot let China get a lead in data centres the way it did in rare earths. <\/p>\n

The FT reports<\/a> on how the EU\u2019s smart-border system ran into trouble.<\/p>\n

US trade historian Doug Irwin details<\/a> how the US has been arguing about trade for 250 years.<\/p>\n

The FT\u2019s Katie Martin says<\/a> the good vibes in markets mask a reset.<\/p>\n

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Trade Secrets is edited by <\/em>Jonathan Moules<\/em><\/a><\/p>\n

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