4 min read
When President Donald Trump made his “Liberation Day” speech on April 2, announcing sweeping tariffs across a range of sectors, markets reacted sharply. Investors feared a replay of the disruptive trade battles of his first term, and stocks dropped as they tried to assess how new levies might ripple through global supply chains.
But six months on, the story looks different. Much of the initial panic has faded, replaced by recognition that the real economic impact of Trump’s tariffs has been softened by carve-outs, negotiated deals, and exemptions. In fact, stocks snapped out of a multiday losing streak on Friday, reacting almost with disregard to the latest surprise from Trump’s social media account.
Now, as Trump tries to reignite the trade war with an overnight announcement of a slew of tariffs, including a 100% tariff on branded and patented pharmaceuticals and a 50% tariff on furniture imports, markets are barely reacting.
Michael Browne, global investment strategist at Franklin Templeton, said that the markets regard tariffs as “over.”
“The real level of tariffs is much lower, which is one of the reasons the impact has been muted,” Browne told the Financial Times.
The other reason could be that consumers have proved far more resilient in the face of higher prices than economists once expected.
At first, the news rattled European and Asian drugmakers. Zealand Pharma dropped nearly 3%, Novo Nordisk lost 1.6%, and India’s Sun Pharmaceutical and Divi’s Laboratories fell more than 3% in early trading. The Stoxx Europe 600 Health Care index swung between gains and losses before closing flat.
Yet European equities as a whole closed higher, underscoring how investors now discount Trump’s tariff announcements.
The Pan-European Stoxx 600 finished the day up 0.8%, with the CAC 40 in Paris up 0.97%, the DAX in Frankfurt up 0.87%, and Madrid’s IBEX 35 leading gains with a 1.3% rise.
JPMorgan strategists quickly told clients the pharma tariff was “largely avoidable” for companies that expand U.S. manufacturing.
“We continue to see a very manageable overall impact from tariffs to our large-cap coverage,” the note said, according to CNBC.
The resilience reflects the numerous carve-outs from the pharma tariffs. Generics—which account for nine out of 10 U.S. prescriptions—are excluded from the new levies. A U.S.–EU trade agreement limits duties on most European drug exports to 15%. And companies actively investing in U.S. manufacturing, such as Eli Lilly, AstraZeneca, Roche, GSK, and Amgen, are exempt as soon as they break ground on new facilities.
