INTRODUCTION Contributed by: Lincoln Tsang, Ropes & Gray LLP
Moreover, the trade wars will hurt the ongoing global development of AI and digital health. Tariff and export control policies will have much larger effects on AI hardware supply chains. Industry has already responded by urging the Trump administration and the EU to exclude medical products from expanding tariff wars, in the hope of avoiding price increases and supply shortages. On 2 April 2025, President Trump issued an executive order (the Reciprocal Tariffs Execu- tive Order) imposing a reciprocal tariff of 10% at baseline on all US trading partners, effective 5 April 2025. An additional reciprocal tariff will be imposed on 57 countries, effective 9 April 2025. Annex II to the Reciprocal Tariffs Executive Order excludes certain named medicines or categories of medicines – as well as key ingredients used in drug formulation – from the reciprocal tariffs. However, it is not apparent that the exclusion applies to medical devices and medical tech- nologies – although semiconductor devices and semiconductor-based transducers are excluded. Tariff relief for pharmaceuticals could be short-lived, as the Reciprocal Tariffs Execu- tive Order contemplates applying the so-called Section 232 investigation to pharmaceuticals alongside lumber, semiconductors, and other sectors. Sector-specific import duties could be on the horizon following such an investigation, given the declared Trump policy to strengthen the USA’s pharmaceutical manufacturing capac- ity so as to avoid relying on imported medicines. Following the President’s decision to pause many of the tariffs worldwide for 90 days, the EU suspended retaliatory counter-tariffs on 10 April 2025; however the interim measures do not remove the trade uncertainties.
The impact of commercial trade policies has not attracted a great deal of attention in the life sci- ences sector until very recently. This is largely because, since the late 1980s, key geographical regions – through the processes of the Interna- tional Council for Harmonisation (in the case of pharmaceuticals) and the Global Harmonisation Task Force (now rebranded as the International Medical Devices Regulatory Forum) – have striv- en to promote harmonisation efforts to standard- ise regulatory requirements in order to minimise friction in the transboundary movement of medi- cines and healthcare products. Changing role of USA in global public health The WHO also has a pivotal role in promoting global public health and global harmonization. The USA has been by far the biggest financial contributor to the WHO’s global health initia- tives, contributing circa USD960 million. On 20 January 2025, the executive order by the Presi- dent famously entitled “Withdrawing the United States from the World” gave official notice of the USA’s intention to withdraw from the WHO, citing grounds arising from the WHO’s mis- handling of the COVID-19 pandemic and other global health crises, its failure to adopt urgently needed reforms, and its inability to demonstrate independence from the inappropriate political influence of WHO member states. The significant leadership change in US health- care regulation will also likely result in potentially seismic legislative and policy regulatory policy changes, as well as challenge operational resil- ience in a number of key federal public health agencies. These can be globally impactful, given that the USA has significant influence on the global regulatory compliance landscape and has been instrumental in leading many interna- tional co-operative initiatives. Moreover, the new Trump administration has already declared its
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