Trump’s Risk With Looming European Union Trade War: Maybe Your Health

The European Union dominates a wide range of U.S. imports of medicines for treating diabetes, high blood pressure, depression and cancers as well as many of the chemical compounds that are then used to produce some of these same drugs and others domestically.

That’s why, with President Trump’s threatened 30% tariffs on the 27-nation European Union set to go into effect on Aug. 1, the stakes are more consequential to Americans than with trade wars he initiated with countries that provide cell phones, sweaters, toys or even motor vehicle parts.

Increased costs for critical medicines would hit the nation’s poorest and uninsured the hardest, of course.

The European Union is sending some signals that it does not intend to back down. The tariff fight with the European Union is unique in that Trump tends to prefer bilateral negotiations; the European Union is composed of 27 countries.

Trump has twice delayed imposing most of the tariffs he initially announced on April 2 against the world, including more than 100 nations with which the United States has a trade surplus. The 10% baseline tariffs are in effect as well as some other industry-specific tariffs.

In taking on China, Canada, Mexico and the European Union, Trump is focusing on some of the largest U.S. trade deficits – but at the same time focusing on some of the United States’ largest export markets, damaging a key metric in the process.

Overall, the European Union is accounting for 20.22% of all U.S. imports and 18.57% of all U.S. exports through May, the latest data available from the U.S. Census Bureau.

To see what imports would be most detrimental to the United States should the 30% tariffs actually go into effect next Friday, I focused on the categories of imports where the European Union has the greatest market share globally.

I focused on the top 50, which account for 73.29% of all its imports through May rather than all 1,200-plus. (For those familiar with the harmonized system, I am working at the four-digit level.)

What I found was that six of the 10 with the largest global market share were related to healthcare, ranging from 62.36% for one to 99.22% for another.

While medicines that are critical to Americans’ health, and sometimes their lives, are in the bull’s eye of American health, so too are U.S. exports for Europeans’ health and well-being.

Six of the top 10 U.S. exports, calculated as in the manner described for imports above, are also related to healthcare. In fact, three of the six are the same for both exports and imports. On the export list, the European Union percentage of these six U.S. exports ranges from 46.78% to 98.86%.

Looking first at the U.S. imports, 99.22% of $42.95 billion in U.S. shipments in the insulin, hormone and steroid category (HS code 2937) are from the European Union, with 98.48% coming from Ireland. It is the top import from the European Union this year.

The same category is a top U.S. export to the European Union, accounting for 53.85% of $4.94 billion in U.S. exports to the world, ranking fourth overall.

In the import category of plasma, vaccines and other blood “fractions,” 84.56% of the $54.29 billion total is entering from the European Union. Ireland and Germany are accounting for 47.57% of all U.S. imports in this category (HS code 3002) while the Netherlands, Belgium, France, Switzerland and Italy account for another 28.07%. It is the second most important import from the European Union this year.

On the export side, the United States sends 53.85% of the $22.97 billion in shipments to the world to the European Union. It is the United States’ fourth-ranked export to the European Union.

The third category (HS code 3003) that appears on both top 10 lists is for a wide variety of pharmaceuticals that are classified by how they are not used, that is not in an individual dose form, such as pills.

On the U.S. import side, the European Union accounts for 76.05% of the $1.33 billion total through May; on the U.S. export side, the European Union accounts for 85.03% of the $541.75 million total.

On the import side, there are two categories of heterocyclic compounds, commonly used in the production of medicines. With one (HS code 2934), the European Union accounts for 84.56% of all U.S. imports and the other (HS code 2935), 62.36%. The value of the first is $4.48 billion, with the second at $2.61 billion.

The sixth and final import category where the European Union has the greatest market share is a category which, is something of a grab bag of chemical contraceptives, contrast agents administered during X-rays and other tests, and so-called sterile surgical catgut, which is used for internal stitches. In the case of the European Union, 74.37% of the $2.42 billion global total, $1.1 billion is chemical contraceptives.

Two of the four categories among the top 10 on the import side that do not fall under the broad umbrella of the healthcare industry are, however, well known U.S. imports from Europe, wine and perfume.

The European Union is responsible for 79.77% of the $2.97 billion in wine imports into the United States through May and 80.78% of $2.15 billion in perfumes.

While these are the U.S. import categories that the European Union dominates by global market share, they are not the largest by value.

Among those not mentioned above for market share that are among the top 10 by value from the European Union are:

• Medicines in single-dose or pill form (HS code 3004), with a 47.73% of the $49.07 billion total through May.
• Passenger vehicles (HS code 8703), with a 19.80% of the $81.07 billion total.
• Jet engines and parts (HS code 8411), with 37.86% of the $13.06 billion in U.S. imports from the European Union.
• Medical instruments (HS code 9018), which includes everything from needles and catheters to MRI machines and parts, with 24.87% of the $18.57 billion total from the European Union.
• Artificial knee and hip joints and other body parts (HS code 9021), with 51.64% of the total $8.06 billion imported from the world through May coming from the European Union.

Switching over to the U.S. export side, these two were among those with the largest market share not previously mentioned:

• The broad nut category (HS code 002) that is dominated by shelled almonds and pistachios in the shell, with 37.49% of the $4.09 billion total in U.S. exports through May headed to the European Union.
• The alcoholic spirits category (HS code 2208) that is dominated by bourbon and whiskey among the exports sent to the European Union, 46.66% of the total $1.08 billion sent to the world.

Four top 10 exports by value, rather than market share, headed to the European Union are worth mentioning:

• Oil (HS code 2709), with 36.62% of the total $43.21 billion in U.S. exports to the world headed to the European Union through May. This is the top U.S. export to the European Union.
• Aircraft and parts (HS code 8800), with 27.26% of the $57.94 billion in U.S. exports to the world headed there. This is the second-ranked export there this year.
• The petroleum gas that includes liquid natural gas, or LNG (HS code 2711) with 37.37% of the total $35.56 billion in U.S. shipments to the world. This is the third-ranked U.S. export to the European Union through May.
• Passenger vehicles (HS code 8703), with 21.09% of the $22.42 billion in exports to the world sent to the nations of the European Union. This is the No. 8-ranked U.S. export there this year.

The range of U.S. imports sent from the European Union and U.S. exports to the European Union is wide-ranging but when looking just at where the E.U. is either a dominant importer into the United States or buyer of U.S. exports, healthcare holds a dominant presence, making Trump’s threatened 30% tariffs on imports from the 27-nation bloc set to go into effect on Aug. 1, particularly risky for Americans and Europeans alike.