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Workers navigate the manufacturing floor at Eli Lilly & Co.’s facility in Kinsale, Ireland, as of September 12, 2024. Since 2020, Eli Lilly has significantly expanded its production capabilities, committing over $17 billion to the establishment of new plants and the enhancement of existing ones. This expansion is primarily driven by the anticipated demand for weight-loss and diabetes medications, which are projected to rank among the top-selling pharmaceuticals ever.
The U.S. imported nearly $600 billion in goods from European Union nations in 2024. As former President Trump considers broadening tariffs beyond metals to encompass a variety of products from allied nations, certain categories will encounter greater impacts than others in the evolving “reciprocal” trade conflict initiated by the U.S. government.
Pharmaceuticals emerged as the leading import category from the EU in 2024, with a total value of $127 billion, as indicated by U.S. Trade Census data analyzed by ImportGenius. This figure prominently includes semaglutide, a key ingredient in popular GLP-1 weight loss drugs like Nova Nordisk’s Ozempic and Wegovy and Eli Lilly’s Mounjaro, which collectively represent the sixth-largest U.S. import from the EU at $15.6 billion.
The healthcare sector is poised to bear some of the heaviest burden from the tariff impacts. Surgical and medical instruments saw imports valued at $37 billion, while medical devices—including CRT Machines, respirators, and surgical tools—totaled $22 billion. Vaccines, hearing aids ($1.3 billion), and artificial joints ($2.5 billion) also ranked among the top imports in 2024.
Major pharmaceutical companies like Lilly, with significant operations in Ireland, alongside Novo Nordisk from Denmark, are increasing their manufacturing presence in the U.S. in response to the growing demand for weight-loss drugs. Lilly has earmarked substantial resources for new facilities and research and development centers near its Indiana headquarters, while Novo Nordisk continues to invest heavily in North Carolina.
On a recent flight on Air Force One, Trump announced plans to impose reciprocal tariffs on “every country” that charges import duties on U.S. goods, stating, “If they charge us, we charge them,” according to reports from NBC News.
Currently, Trump has only issued a presidential memorandum on these tariffs, with reports from CNBC suggesting that they may not be implemented for several months. The White House has indicated that potential tariffs could target value-added taxes prevalent in the EU, as well as Canada, Mexico, and various other nations, along with currency devaluations. Additionally, shipping goods through third-party countries to sidestep tariffs would trigger reciprocal tariffs.
The White House’s fact sheet identified products such as U.S.-EU shellfish and automobiles as examples of unfair trade practices, along with ethanol in trade with Brazil and motorcycle exchanges with India. Moreover, many countries’ digital services taxes aimed at U.S. tech firms have drawn Trump’s ire, expanding his robust approach to international economic relations.
While exemptions for industries like pharmaceuticals and automobiles had been suggested in previous discussions, including comments from House Speaker Mike Johnson to Reuters, Trump stated in an Oval Office press conference that no such exemptions would apply. He also mentioned the likelihood of upcoming auto import tariffs, as reported by Reuters.
The actual implementation of these tariffs remains in flux, particularly regarding which nations and products might be impacted. “I’ve decided for purposes of fairness that I will charge a reciprocal tariff,” Trump stated recently. “It’s fair to all. No other country can complain.”
Howard Lutnick, Trump’s pick for Commerce Secretary, is set to spearhead investigations related to this tariff strategy, with findings anticipated by April 1.
Experts within the trade sector caution that executing a reciprocal trade war may be more complicated than it sounds. Josh Teitelbaum, senior counsel at Akin who was involved in the Trans-Pacific Partnership, remarked, “Declaring reciprocal tariffs will not be easy. Identifying disparities in tariff rates across multiple countries and products would constitute a logistical nightmare. Substantial further research is essential before such a measure can be enacted.”
Several instances illustrate the tariffs the EU imposes on U.S. exports, including a 12% tariff on U.S. apparel, a 10% tariff on vehicles, and a 2.5% tariff on European cars. Light trucks imported into the U.S. incur a remarkable 25% tariff.
According to the Trade Partnership Worldwide, the imposition of new EU tariffs may cost American businesses approximately $2.9 billion weekly, with the pharmaceutical sector facing considerable strains.
“Nationally, around 25% of EU imports consist of pharmaceuticals,” noted Dan Anthony, president of Trade Partnership Worldwide. “This translates into a potential additional tariff burden of approximately $100 million daily for the pharmaceutical industry alone.”
Teva Pharmaceuticals, the largest global manufacturer of generic medications, also figures prominently among European pharmaceutical imports.
The impact of tariffs will vary geographically, with Indiana—home to Eli Lilly—being particularly vulnerable, as medical equipment and pharmaceuticals represent over 75% of potential tariffs facing Indiana companies. New Jersey’s exposure is also notable, with tariffs applying to passenger vehicles, petroleum products, pharmaceuticals, personal care products, and medical devices.
In 2024, imports of cosmetic products and perfumes to the U.S. from the EU totaled $12.4 billion.
North Carolina ranks third in U.S. states for exposure to potential tariffs, primarily due to its concentrated pharmaceutical imports.
U.S. Has Collected $264 Billion in Tariff Duties Under Presidents Trump and Biden
Businesses relying on imports from the EU will inevitably be affected by the tariffs, which have consistently imposed higher costs on companies over recent years. The overall tariff burden during Biden’s presidency has exceeded twice the amount collected during Trump’s first term.
As of late last year, U.S. trade war tariffs accumulated over $264 billion in customs duties, based on analytics from the Tax Foundation. Approximately $89 billion of this total (34%) was collected during Trump’s time in office, while the remaining $175 billion (64%) occurred under Biden.
The current tariff burden on businesses amounts to $78 billion, as estimated in 2024, and could escalate to upwards of $400 billion if all proposed tariffs—ranging from steel and aluminum to those affecting Mexico, Canada, China, and the EU—are enforced. U.S. firms expect to contribute $43 billion in tariffs linked to Trump’s tariffs on Chinese imports, in addition to $11 billion for steel and aluminum. Meanwhile, projected tariff impacts related to Canadian imports stand at $103 billion, with $126 billion for Mexican trade and $149 billion for EU products.
Peter Boockvar, chief investment officer at Bleakley Financial Group, acknowledges the rationale behind retaliatory tariffs, but emphasizes that these measures should be temporary rather than permanent. He suggests that while higher tariffs could elevate prices initially, they may ultimately lead to broader economic harm, leaving consumers with even higher expenditures following a cumulative cost of living increase of over 20% in recent years.
Recent U.S. consumer inflation statistics for January flagged a more substantial uptick than anticipated, indicating that the Federal Reserve’s previous efforts to curb inflation have encountered challenges, even as wholesale inflation metrics have offered some positive signs.
From Ikea to Industrials to Luxury Buyers
On a broader scale, Ikea appears to be among the leading U.S. recipients of shipments from the EU, alongside wine and spirits logistics companies like Hillebrand, which integrates with DHL, and retail giant Amazon.
Aside from pharmaceuticals, the leading imported product categories include machinery and mechanical parts ($89.8 billion), vehicles ($60.3 billion), and electrical machinery and components ($39.2 billion). The automotive segment encompasses global brands like Mercedes, Michelin, Ford, Volvo, Volkswagen, and BMW.
A detailed examination of import documentation unveils an extensive array of imported goods, ranging from Bosch and John Deere equipment to tiles from Ireland and Spain, lithium-ion batteries from Poland, BMW-specific batteries, and even Irish whiskey. The list also includes Goya Foods products from Spain, wind turbines, and various other spare parts.
Consumers of luxury goods can also expect significant price increases. “The EU accounted for $9.4 billion in imports of precious metals, stones, and pearls,” remarked William George, director of research at ImportGenius. “In addition, the U.S. imported $5.5 billion in artworks, collector’s items, and antiques last year.”
Paintings comprised the largest segment at $4 billion, with sculptures next at $800 million. Luxury handbags held a value of around $2.5 billion in imported goods.
American consumers indulging in sparkling beverages might see price changes too, as imports of major sparkling water brands (such as Evian, Perrier, Pelligrino, and Gerolstiner) averaged about 2,400 twenty-foot equivalent units (TEUs) monthly over the past year.
Wine imports from the EU totaled $5.5 billion in 2024, with shipments averaging 14,000 containers monthly—almost filling half a shipping vessel. Cognac and armagnac represented significant portions of the spirits market at $1.3 billion, followed closely by vodka at $1.1 billion, while sparkling wine imports reached $1.7 billion. Extra virgin olive oil from the EU contributed to a $1.8 billion market in 2024.
Imports constitute approximately 15% of the U.S. GDP, as noted by Larry Lindsey, CEO of the Lindsey Group. “If all tariffs were to be applied—though we will certainly not pay the full amount—a 10% tariff across the board would equate to roughly 1.5% of GDP, whereas I estimate we may end up around 0.9%,” he indicated.
However, Lindsey cautions that the repercussions of failing to retain current tax rates and regulations could be two to three times more impactful due to behavioral factors.
“Presently, our negotiators appear to be addressing the more straightforward issues first and amassing momentum to demonstrate their unassailable position. It seems to be effective—ultimately, the goal may be to enforce a 10% tariff on all, supplemented by a significantly higher rate specifically targeting China, which should resolve the issue of product diversion,” he added.
Moreover, India has also come under scrutiny in the latest round of tariff discussions. Trump has pointed to cases like Harley-Davidson motorcycles as a rationale for retaliatory measures due to India’s own trade duties on imports—a matter that India has addressed directly as Prime Minister Narendra Modi prepared for discussions at the White House.
“India imposes a higher number of tariffs than nearly any other nation,” Trump asserted during a recent press conference.
Potential new tariffs on steel and aluminum from India, based on 2024 import statistics, could amount to approximately $190 million. Walmart, which accounted for 62% of all imports from India to the U.S. in 2024, appears particularly vulnerable to these reciprocal tariff threats. Other imports from India include products for IKEA, the generic antibiotic doxycycline, parts for Kawasaki, Lockheed Martin aircraft structures, aluminum castings, various spices from McCormick, and diverse retail goods destined for stores like T.J. Maxx and Ralph Lauren, as well as imports from Schneider Electric.
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