Trump’s Greenland tariff threats are turning markets into a risk-off mess, but pharma is basically shrugging it off.
Trump said the US will impose 10% tariffs on eight European countries (Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland) starting February 1 unless they reach a deal to allow the US to purchase Greenland. If no deal happens, that tariff rate rises to 25% by June 1.
Markets took it badly. By Tuesday midday, the S&P 500 was down 1.2%. But the NYSE Arca Pharmaceutical Index only dipped 0.5%. That gap matters because pharma is one of the most valuable industries in Europe, and normally would be a prime target in a tariff war.
Why pharma isn’t panicking
The key reason: drugmakers have spent the last six months cutting tariff “immunity” deals with the Trump administration. In exchange for commitments like investing in US manufacturing and lowering drug prices, they’ve essentially negotiated protection from these tariff shocks.
Novartis $NVS ( ▼ 1.55% ) CEO Vas Narasimhan said on CNBC that Novartis expects its deal to exclude it from tariffs. And even if it doesn’t, he said the company will be fully domestically manufactured for the US market by mid-year anyway.
Translation: even if tariffs get messy, pharma thinks it already future-proofed itself.
What could still go wrong?
Economist Diederik Stadig at ING said he expects the pharma deals to hold, meaning the 10% tariffs likely won’t apply to the drugmakers who negotiated exemptions.
But if tariffs do end up applying to pharmaceuticals anyway, Stadig says Germany, the Netherlands, and the UK would be hit hardest.
He also noted a huge reality check: headline tariff rates are usually way higher than what actually gets enforced, and enforcement gets even harder as tariffs become more specific.
Bottom line: markets are getting spooked, but pharma looks protected for now, either through negotiated tariff carve-outs or through a faster shift toward US-based manufacturing.