The week after Easter begins with trepidation as US President Donald Trump’s deadline for a deal to reopen the Strait of Hormuz approaches.
In terms of trade-related news, we bring you an update on US tariffs, with the White House announcing new 100% tariffs on pharmaceuticals at the end of last week.
UK-EU ‘reset’ negotiations also continue, with the British government reportedly set to reverse plans to ban foie gras imports from the continent.
New US pharma tariffs
Just before the bank holiday weekend on Thursday (2 April), Trump announced levies as high as 100% for major pharmaceutical firms that haven’t committed to manufacturing drugs in the US by the end of his second term.
The new rates will also not apply to companies trading under deals that the US negotiated with partners since last year’s ‘Liberation Day’ tariffs. This includes the UK, EU, Japan, South Korea, Switzerland and Liechtenstein.
The move represents the first expansion of Trump’s ‘reciprocal’ tariff regime since the Supreme Court’s ruling in February that he had overreached executive authority by using the International Emergency Economic Powers Act (IEEPA) to introduce the duties in April 2025, according to Politico.
The new pharmaceutical levies are being introduced following an investigation completed under Section 232 of the Trade Expansion Act. The investigation found that imports of drugs manufactured elsewhere were a threat to “national security”.
“I have determined that it is necessary and appropriate to impose a 100% ad valorem duty rate on the import of patented pharmaceuticals and associated pharmaceutical ingredients,” Trump wrote in the presidential order on Thursday.
Many major drug producers have struck deals with the White House since Liberation Day, including Pfizer, Merck and Astra Zeneca.
UK exemption
The UK and US also agreed the full legal text of the trade deal that secures preferential trading terms for British pharmaceutical exporters on Thursday.
This deal secures 0% tariffs on pharmaceutical exports to the US for at least three years. In return, the UK will pay higher prices for US-made drugs.
“Partnerships like this demonstrate the tangible benefits of our strong UK-US economic relationship, and we will continue to prioritise getting the best for British business through the Economic Prosperity Deal,” said business and trade secretary Peter Kyle.
The deal also applies to UK medical technology exports.
US steel and aluminium changes
The US has also adjusted Section 232 tariffs on imported steel, aluminium and copper to clarify how the duties are “assessed”, with “clear rules for calculating” them.
Products made entirely out of the metals will attract a 50% duty on their full value, with derivative articles “substantially made” of the metals attracting a 25% rate.
Products made abroad with entirely US-origin steel, aluminium or copper will be subject to 10% rates. The full rules can be found in this fact sheet from the White House.
“We did not receive the tariff revenue we expected, because the world artificially reduced their claimed cost of steel coming into America,” a senior administration official told Politico.
“We’re just getting rid of the artificial nature.”
Iran deadline looms
The deadline Trump has given Iran to strike a deal to reopen the Strait of Hormuz is due to expire tonight at 8pm Eastern Time (1am on Wednesday 8 April in the UK).
Trump has threatened attacks on civilian infrastructure in Iran if a deal isn’t struck, including bridges and power plants.
“The entire country can be taken out in one night, and that night might be tomorrow night,” Trump told reporters in the White House.
The uncertainty has caused oil prices to rise again, with Brent crude up 1.1% to US$111 a barrel this morning. Iran has threatened “crushing” attacks on the US and Israel in response to any action against civilian infrastructure.
Over the weekend, the president came under fire from commentators across the US political spectrum for a social media post in which he called the Iranian government “crazy bastards” and in which he said the country will be “living in hell” if it didn’t open the Strait of Hormuz.
Post-Hormuz resilience?
The closure of the Strait of Hormuz has caused huge uncertainty for global trade, but Gulf nations have responded by “constructing the trade infrastructure of tomorrow” that will deliver “post-Hormuz resilience”, according to Badr Jafar, the UAE’s special envoy for business and philanthropy. Writing in the FT today, he says:
“Saudi Arabia’s Red Sea ports and expanded pipeline capacity offer an alternative energy corridor. The UAE’s east coast provides deep-water ports and pipeline routes connecting Gulf producers to the Indian Ocean. Oman’s developments at Duqm and Sohar sit well outside the chokepoint.
“Goods and energy are already moving along these routes — in some cases through cross-border land bridge arrangements that would have seemed improbable just months ago.”
“Rerouting essential commerce away from a single chokepoint de-risks not only the economies of the region but global supply chains,” he argued.
Foie gras the price to pay for reduced EU trade friction?
There were two major developments in the UK-EU relationship over the weekend.
Firstly, the Telegraph reported that the Labour government is set to break its manifesto commitment to ban foie gras imports in exchange for a trade deal with the EU that reduces trade friction. The UK will drop its proposed ban on fur imports as well, which the EU has also set out as a red line in its negotiations for the Common Sanitary and Phytosanitary Area.
EU member states are not allowed to ban one another’s imports because of animal welfare. The UK has not yet used its post-Brexit independence to implement a ban on EU products like foie gras or fur.
Secondly, new EU cross-border banking rules, under the EU Capital Requirements Directive VI that comes into force next year, could hit the City of London.
The new rules will restrict the core banking services that non-EU banks can provide to EU clients from outside the bloc, including lending and cash management. The intention of the directive is to force US and UK banks to increase their EU operations.
TheCityUK lobby group has told the FT that the new EU rules could “cripple” the EU’s ambition to bolster defence spending through private finance. The UK Treasury is “aware of developments” relating to the directive and is “monitoring the position”.
Elsewhere in the headlines
· The UK government has published more information about its new quotas and tariffs on steel imports, that will take effect from 1 July
· UK manufacturers could be required to pay £940m extra a year due to business rate changes that are coming into effect this month, the Guardian reports
· Sales of electric vehicles have surged in the US in response to rising petrol prices, the FT reports
Other dates in the diary
Tuesday: Trump’s deadline for the US and Iran to reach a ceasefire deal that reopens the Strait of Hormuz
Wednesday: Global S&P Global construction PMI data published for the UK and Eurozone
Thursday: The Masters golf tournament begins at the Augusta National Golf Club in Georgia, US
Friday: The Court of International Trade will consider the legality of President Donald Trump’s latest round of global tariffs
Saturday: The 178th Grand National horse race in Aintree
Sunday: Polls close in Hungary, ending one of the closest elections to have taken place in the country since Viktor Orbán entered office 16 years ago
