W.41 Policy Watch
The Policy Watch is a weekly update which aims to provide concise insights into the current policy landscape. Tailored for our members and individuals interested in international affairs, this update offers a brief yet comprehensive summary of key developments affecting policy decisions and political trends both globally and locally.
Global
President Donald Trump announced an 100% tariff on branded or patented pharmaceutical products imported into the US. A key exemption exists for companies that are “building” manufacturing plants in the US. The explicit goal is to pressure drug manufacturers to ramp up production within the United States.
The UK
- The UK is in a vulnerable position as it lacks a cap on the proposed US pharmaceutical tariffs, leaving it exposed to the full 100% rate.
- Although the UK secured an initial tariff deal with the Trump administration that noted an intention to negotiate “significantly preferential treatment” for pharmaceuticals, these terms were not finalised.
- This uncertainty highlights existing concerns about the UK’s attractiveness for pharmaceutical investment.
Sweden
- In contrast, Sweden is shielded by the EU’s collective trade agreement, which includes a 15% ceiling on pharmaceutical duties, described as an “insurance policy” for European businesses.
- However, the Swedish life science industry has voiced deep concerns, as the impact is expected to be uneven.
- While larger firms like AstraZeneca with US production capacity will be less affected, small and medium-sized enterprises face a significant threat to their business models.
Review
- The situation remains fluid, with the UK prioritising a bilateral deal to protect its pharmaceutical sector. Sweden, operating within the EU framework, is focusing on the long-term strategy of strengthening the European internal market for life sciences in response to trade uncertainty.
Local
The European Commission has announced plans to tighten steel import measures following earlier U.S. tariffs, with the changes expected to affect trade dynamics across Europe and implementation targeted for as early as January 2026.
Sweden
- For Swedish producers, the EU’s new tariff and quota measures have potential to be largely favourable. EU buyers may adjust sourcing strategies in response to the new quotas, which could influence demand for Swedish steel.
- Swedish exporters may see stronger demand as EU buyers prioritise internal suppliers. Downstream industries in Sweden, including construction, machinery, and automotive sectors, may face higher input costs depending on supply-chain adjustments. Monitoring final quota allocations and tariff implementation will be important for planning production and exports.
UK
- The EU’s quota reductions and tariff measures may affect UK steel exports to EU markets. Shipments exceeding the quota could be subject to tariffs of up to 50%, potentially increasing costs for UK manufacturers supplying to EU customers.
- The measures may influence sourcing decisions for steel-intensive industries, including automotive, construction, and engineering sectors.
- The initiative forms part of a wider “strategic autonomy” agenda in Brussels, seeking to reduce dependence on external suppliers while ensuring fair competition. As such, British exporters to the EU could face stricter quota limits under post-Brexit arrangements.
Review
- For Swedish and UK firms, the implications are mixed. The proposal is expected to be finalised later this month following consultations with member states and industry stakeholders. Businesses operating in steel-intensive supply chains should closely monitor the outcome, as new tariff schedules could take effect as early as January 2026.
- The policy also underscores how industrial tariffs and sustainability goals are increasingly intertwined, with Brussels framing the move as both an economic and environmental safeguard.
