US and UK Strike New Zero Tariff Deal on Medicines Amid Rising Pressure

The United States and the United Kingdom have reached a new agreement that will keep tariffs on British pharmaceutical exports to America at zero, offering temporary protection to one of the UK’s most valuable export sectors. In exchange, the UK has committed to increasing what the National Health Service pays for medicines, marking the first major rise in drug spending thresholds in more than two decades.

The deal arrives after repeated warnings from US President Donald Trump, who had threatened to impose tariffs of up to one hundred percent on branded medicines imported from the UK. Pharmaceuticals are among Britain’s largest exports to the US, and any tariff increase would have had far-reaching consequences for the industry, jobs and investment.

Business and Trade Secretary Peter Kyle welcomed the agreement, saying it ensures that the UK’s pharmaceutical exports, valued at more than five billion pounds a year, will continue to enter the US market without added import costs. He described the deal as a move that protects employment, strengthens investor confidence, and supports the UK’s ambition to become a leading hub for global life sciences.

According to data from the Department for Business and Trade, the UK exported over eleven billion pounds worth of medicines to the United States in the twelve months leading up to September. This figure represented nearly eighteen percent of all UK goods exports during that period, underscoring how vital the sector is to the national economy.

Although pharmaceuticals were not part of the sweeping tariffs the US announced earlier this year, President Trump frequently voiced frustration about America’s dependence on overseas manufacturing. He also argued that US consumers pay higher prices for medicines, which he said effectively subsidizes drug costs for other nations. His administration pushed for countries like the UK to contribute more by raising their own spending on pharmaceuticals.

Under the new agreement, the UK will increase the threshold used to decide whether new treatments are too expensive, raising it by twenty five percent. The NHS will also significantly expand its overall medicine budget, aiming to move from spending 0.3 percent of GDP to 0.6 percent over the next decade.

Drug companies will also benefit from a cap on the amount they are required to pay back to the NHS when overall spending exceeds the allocated budget. This payback rate will be limited to fifteen percent, a notable reduction from last year when companies had to return more than twenty percent.

In return, British medicine exports will be shielded from tariff hikes for three years. White House spokesman Kush Desai called the agreement a historic step that pushes other developed countries to cover what he described as their fair share of global medicine costs.

The negotiations unfold amid rising tensions in the UK over medicine pricing. Health Secretary Wes Streeting said earlier this year that he would not allow pharmaceutical firms to take advantage of the NHS, after talks between industry leaders and the government collapsed over disagreements on pricing.