In the South Korea-U.S. trade negotiations, the United States has decided to lower the reciprocal tariff on South Korea to 15%. In particular, the promise of 'most favored nation treatment' for tariffs on Korean pharmaceuticals was welcomed by the domestic pharmaceutical and biotechnology industries as it removes significant uncertainty. However, companies noted that since tariffs will now be imposed on pharmaceuticals that were previously duty-free, the expense burden will inevitably increase, and they will monitor the forthcoming results of item-specific tariffs and prepare countermeasures.
Kim Yong-bum, head of the presidential office's policy office, said on the 31st, 'The reciprocal tariff of 25% that the U.S. had announced to impose on South Korea starting August 1 will be reduced to 15%,' adding, 'Tariffs on semiconductors and pharmaceuticals, which are also scheduled to be imposed later, will receive treatment that is not unfavorable compared to other countries.'
Earlier, Europe and Japan also agreed with the United States on a reciprocal tariff of 15%. If tariffs on pharmaceuticals are charged in the same way, Korea will be able to export to the U.S. under the same conditions as its competitors. A source in the pharmaceutical industry noted, 'It is difficult to impose tariffs on pharmaceuticals, which have been maintained duty-free for a long time to prevent harm to patients, with different rates for each country, and the justification for this is weak.'
U.S. President Donald Trump stated that he will announce the tariff rates and imposition plans for imported pharmaceuticals within two weeks. Europe announced that it has agreed on a 15% tariff on pharmaceuticals in negotiations with the United States.
However, it is expected that the new tariff burden will inevitably lead to an increase in expenses. Industry officials forecast that the imposition of tariffs on pharmaceuticals could raise production costs for global pharmaceutical and biotechnology corporations, resulting in decreased productivity and increasing burdens on patients (consumers) as side effects.
Most large pharmaceutical companies based in the U.S. also have manufacturing facilities overseas. Following pressure from President Trump at the beginning of the year, large corporations have successively announced plans to expand factories in the United States. This poses a significant burden on corporations. Reuters reported, citing experts, that the 15% tariff on pharmaceuticals could incur additional expenses ranging from $1.3 billion (approximately 18 trillion won) to $1.9 billion (26 trillion won) for the pharmaceutical industry.
Domestic corporations have also established contingency plans for potential tariff imposition by acquiring U.S. production facilities or entering into consignment manufacturing contracts with local companies. Celltrion announced on the 29th that it will acquire a U.S. pharmaceutical production facility for up to 700 billion won. SK Biopharm, which is selling its homegrown epilepsy drug 'Cenobamate' in the U.S., secured a consignment manufacturing organization in Puerto Rico.
There are also opinions suggesting the need to find opportunities to strengthen cooperation with the United States to gain a competitive edge. Lee Seung-kyu, vice president of the Korea Bio Association, said, 'In the Korea-U.S. negotiations, it is necessary to demand support measures or benefits, including labor costs, when securing local production facilities from the U.S. central and local governments,' adding, 'Korea and the U.S. should also consider ways to enhance cooperation in the bio industry sector in various respects.'