American tariffs on pharmaceuticals could cost Dutch economy €500 million

The Dutch economy could take a negative hit equivalent to about half a billion euros if U.S. President Donald Trump imposes import duties of 25 percent on pharmaceutical products, according to calculations by analysts at ING. These tariffs could force pharmaceutical companies to decide to invest more in production capacity in the United States, at the expense of investments in the Netherlands and Europe, while cutting back on research and development.

Currently, the Netherlands exports 35.5 billion euros of medicines annually, and imports 23.6 billion euros worth of pharmaceutical products. The 500 million euro impact could worsen in the mid-term if alternatives to Dutch products are developed in the United States, according to ING. This could happen over a period of six to ten years.

The analysts said it is still unclear whether this additional production capacity can even be found in the U.S., let alone developed there. This is because of the overall economic uncertainty linked to the Trump administration’s policies, causing businesses to be more hesitant about investments.

Other European countries that are vulnerable to tariffs mainly include Germany and Ireland, according to ING. Trump wants his tariff policies to force an increase in pharmaceutical production in the United States, in order to become less dependent on foreign suppliers, especially companies in China and India.

ING said it believes that prices in the U.S. will rise as a result of the tariffs. Furthermore, ING analysts concluded that manufacturers of generic medications could start avoiding the American market, which could lead to shortages in the U.S. This could lead to more of these medicines entering the European market, effectively lowering prices and causing European manufacturers to avoid moving production to Europe, as the European Commission wants.

The Dutch bank said that the Commission must be vigilant by protecting the European pharmaceutical sector, while at the same time taking steps to bring more production of the most important generic medicines to Europe.