Trump Targets EU Drug Prices and Trade Barriers

After the United States and China issued a joint statement promising mutual tariff reductions, U.S. President Trump quickly shifted his trade focus to the European Union, criticizing it for "unfair treatment" in trade and pharmaceutical policies towards the United States. This shift may signal the onset of a new round of global trade tensions.

Fire Aimed at Europe After China-U.S. "Ceasefire"

On Monday Eastern Time, China and the U.S. released the "Joint Statement from the Geneva Economic and Trade Talks," specifying plans to lift punitive tariffs and related non-tariff countermeasures by May 14, 2025. This statement marks a pause in the prolonged China-U.S. trade war, leading to a warming market sentiment.

However, just hours later, Trump publicly turned his focus to the EU, calling its trade practices "nastier." He accused the EU of benefiting unfairly, particularly in car and agricultural trade, claiming a severe imbalance. For example, the U.S. imports about 13 million cars annually from the EU but can hardly export any cars to Europe. Similarly, U.S. agricultural products also face high barriers in the EU market.

Trump stated, "They don't accept our products, and we hardly sell anything. They play hardball with us, and we hold all the cards."

Focus on Drug Price Policies: Criticism of EU Suppression of Pharmaceutical Companies

This criticism accompanies a new policy introduction. Trump signed an executive order to link U.S. prescription drug prices to those in other developed countries, aiming for significant price reductions. He specifically called out the EU for negotiating collectively to lower drug prices, which he claims results in an unfair situation where U.S. consumers pay for patients worldwide.

"The EU has been ruthless. Pharmaceutical companies tell me they've faced a lot of unfair treatment. They are forced to accept extremely low prices, which is unacceptable," Trump said, indicating that his order would "almost immediately" reduce U.S. drug prices by 50% to 90%.

He emphasized that major pharmaceutical companies must comply with the new policy, "either voluntarily comply or we will use all federal government's power to ensure the U.S. pays the same prices as other countries."

EU's Countermeasures: Possible Tariffs on €95 Billion of U.S. Products

In response to Trump's accusations, the EU has already proposed a series of potential concessions last week, including relaxing regulations while warning that if negotiations fail, it will impose tariffs on U.S. goods worth €95 billion. The EU argues that Trump's continued tariffs on cars and metals have severely undermined fair trade principles.

In this regard, White House trade adviser, hawkish Peter Navarro, stated that the EU's countermeasures are "a blatant provocation." He stressed that the U.S. would take a tough stance against any attempts to restrict U.S. product exports.

Outlook: Is a U.S.-EU Trade War Imminent?

With China-U.S. economic and trade relations temporarily easing, the Trump administration may focus more on U.S.-EU trade issues. Drug prices and car exports, in particular, might become the next focal points of trade friction. Although the EU seeks to resolve through negotiations, the direction of the relationship remains uncertain in the face of Trump's "aggressive pressure" strategy.

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