London, UK – September 27, 2025 – European stock markets exhibited resilience on Friday, closing higher despite the announcement of new U.S. tariffs. The FTSE 100 index in London rose by 0.7%, while other major European indices also posted gains. The positive market performance suggests investor confidence in the face of escalating trade tensions.
U.S. President Donald Trump unveiled a series of new tariffs, including a 100% duty on branded pharmaceuticals, effective October 1, 2025. The tariffs also encompass 25% on heavy-duty trucks, 50% on kitchen cabinets and bathroom vanities, and 30% on upholstered furniture. These measures are part of the administration’s broader strategy to bolster domestic manufacturing and address trade imbalances.
The pharmaceutical sector reacted with mixed results; European companies like GSK, Novartis, and AstraZeneca remained steady due to their sizable U.S. investments. However, Asian firms such as Chugai Pharmaceutical and JD Health saw notable declines. The tariffs could drive up drug prices, raising inflation fears, though Federal Reserve Chair Jerome Powell noted that inflationary effects from previous tariffs have been limited and spread over time.
The announcement follows surprisingly strong U.S. GDP growth of 3.8% and comes amid ongoing national-security probes into robotics, machinery, and medical devices. Market reactions varied, with shares of home decor sellers like Wayfair and Williams-Sonoma falling sharply ahead of the market open. Uncertainty remains about how the exemption criteria for the pharmaceutical tariffs will be applied.
In Asia, stocks declined sharply following the U.S. tariff announcement. Pharmaceutical companies were particularly affected, with Japan’s Topix pharma index dropping 1.2% and Hong Kong’s drug index down 2%. The broader market also fell as traders reassessed expectations of significant U.S. Federal Reserve rate cuts after robust U.S. economic data, including durable goods orders and revised GDP figures. This diminished hope for aggressive monetary easing, leading to modest declines in U.S. equity futures and reinforcing the dollar.
Despite the challenges posed by the new tariffs, European markets have shown resilience, with investors focusing on the broader economic outlook and the potential for domestic growth. The situation remains fluid, and market participants are closely monitoring developments for further implications.
