Impact of US custom policies on the chemical & pharmaceutical industry

The US is the most important export market for Swiss chemical, pharmaceutical and life sciences industries. However, planned tariff increases could raise production costs and prices, as well as disrupt supply chains, jeopardizing the availability of essential medicines. Protectionist measures and possible countermeasures by the EU could strain trade and political relations.

The USA is the most important export destination for our members in the chemical-pharmaceutical industry. Chemical and pharmaceutical products rank first in the trade of goods, both for exports (63.9 percent of total exports) to the USA and for imports (42.9 percent of total imports) from the USA. In 2024, pharmaceutical products, vitamins and diagnostics accounted for 94.2 percent of our industries' total exports to the US, while organic raw materials and basic materials accounted for 2.4 percent and pesticides for 1.9 percent. Around 94 percent of goods exports can be imported duty-free into the US.

Danger to the supply of medicines due to tariff increases

The impact of the proposed tariff increases varies depending on the exact structure of the tariffs, the type of exported goods (e.g. unique selling point, relevance for supply) and the company's business model. Tariffs on pharmaceuticals, their active ingredients and starting materials would inevitably lead to rising production costs and thus jeopardize the availability of essential medicines. In addition, tariffs usually lead to higher prices for the recipient of the goods.

An interruption of established supply chains could cause supply shortages, especially of critical medicines. The coronavirus pandemic has clearly shown that functioning supply chains are essential to ensure the supply of essential medicines. The US pharmaceutical industry is heavily dependent on global suppliers, particularly highly specialized companies in Switzerland and the EU. Protectionist measures of this kind could make it significantly more difficult and expensive for patients to access necessary therapies.

Impact on prices, contracts and competitiveness

Depending on the level of tariffs, companies may be prompted to consider price increases. However, price increases for affected products are not always possible due to administered prices. This could lead to price increases in negotiations with international customers, which, of course, will not always be accepted. Companies that have long-term contracts with export partners may need to renegotiate existing agreements to cover the new costs. If the products have a unique selling point, this will certainly be easier to achieve than for products with numerous suppliers and competitors.

Switzerland is a central player in the pharmaceutical industry, and trade barriers could disrupt existing supply chains and increase production costs. This would not only affect the industry's competitiveness, but also have negative consequences for research, development and innovation. As a result, patients will suffer the most.

Switzerland in the midst of protectionist measures

If the tariff increases are targeted at products from individual countries, there is a risk of countermeasures that could significantly disrupt established supply chains. This could ultimately result in a trade war that would affect not only companies in Switzerland but also subsidiaries and customers in countries that supply the US market. For example, the Trump administration is considering raising tariffs on EU exports. Corresponding reactions by the EU could also affect Switzerland as a third country. In this case, it would be necessary to ensure that Switzerland is not affected by possible countermeasures. The experience with the EU steel safeguard measures has shown the impact this can have. Therefore, intensive exchanges with the relevant authorities are essential. At the foreign policy level, it must be ensured that Switzerland is excluded from any countermeasures.

Should the EU decide on counter-measures that also affect Switzerland, this could also negatively influence the approval of the population for the Bilaterals III, particularly in view of the upcoming referendum on the negotiation package Switzerland-EU. The EU is our most important trade partner: More than 50 percent of our exports go to the EU, and over three quarters of all chemical-pharmaceutical products come from the EU. Therefore, unhindered access to the EU internal market is of central importance.