U.S. and UK Announce Agreement Exempting UK-Origin Pharmaceuticals from Tariffs

On December 1, 2025, the Office of the United States Trade Representative (USTR) and UK Government announced an agreement in principle with the United Kingdom regarding the pricing of pharmaceutical products.

The announcement states that UK-origin pharmaceutical products — including pharmaceutical ingredients and medical technology — will be exempted from tariffs imposed under Section 232 of the Trade Expansion Act of 1962 pursuant to the ongoing investigations into pharmaceuticals, pharmaceutical ingredients, and derivative products at the U.S. Department of Commerce. President Donald Trump has repeatedly threatened high tariff rates on pharmaceuticals (and to a lesser extent on medical equipment), but no official announcements have been made as the investigations are continuing.

The United States has also agreed to refrain from targeting UK pharmaceutical pricing practices under any investigation that may be initiated under Section 301 of the Trade Act of 1974, which can result in the imposition of tariffs if the USTR determines that another country has placed unreasonable burdens on U.S. commerce.

In exchange for these promises, the UK has agreed to revise the pricing formula used by the National Health Service to determine how much it pays companies for medications. This is expected to benefit U.S. companies selling their products in the UK.

While the exact language and specifics of the deal have not yet been published, the UK government has lauded the deal, stating in a press release that it will see “the UK become the only country in the world to secure a zero percent tariffs on pharmaceuticals” destined for the United States.

Sidley is continuing to monitor for the imposition of Section 232 tariffs on pharmaceuticals and the official language exempting UK-origin products. Should you have any questions about how this affects your business, please reach out.