Washington's pharmaceutical tariffs are hitting one of Italy's most important export markets
Generic drugs will remain duty-free for the time being, but high duties may be imposed starting in 2028—the risk premium on government bonds remains low
Rome – U.S. trade policy remains the dominant issue in the markets—and it directly affects Italy. According to the latest announcements from Washington, generic drugs will initially be allowed to enter the United States duty-free. This grace period is limited to two years: Starting next month and through mid-2028, no duties will be levied.
After that, however, it will become expensive. The plan calls for a phased surcharge that is set to start at 100 percent in 2028 and rise to 200 percent the following year. Brand-name and patent-protected drugs are exempt from this; a 100 percent tariff already applies to them. The stated goal of the measure is to shift the production of generic drugs to the U.S.—the two duty-free years are intended to give manufacturers time to relocate their production there.
The stakes are high for Italy. The country is one of Europe’s largest pharmaceutical exporters, and the U.S. is a key market. According to the industry association Farmindustria, Italy exported pharmaceuticals worth approximately 15.8 billion euros to the United States in 2025—nearly a quarter of its total pharmaceutical exports and a significant increase over the previous year. The two-year duty-free period provides the industry with some short-term relief, but the planned phased implementation starting in 2028 is seen as a serious risk to one of the country’s strongest industrial sectors.
Meanwhile, conditions on the bond markets remained calm. The risk premium on 10-year Italian government bonds relative to German Bunds—the closely watched spread—remained stable at around 82 basis points. The yield on 10-year bonds rose slightly to about 3.98 percent. This means the spread remains at a historically low level—far removed from the crisis levels of previous years and a sign of investors’ continued confidence in Italy’s finances.
