FIRM BEHAVIOR IN TRADE POLICY

Abstract

During the 2025 EU-US trade negotiations, the most traded goods, pharmaceuticals, became subject to tariffs for the first time in 30 years. Balancing both US and EU domestic and foreign policies, the industry navigated a complex environment reflected in actions and reactions. Bridging two strains of research within international political economy, this thesis examines the behavior of the European pharmaceutical industry and multinational corporations operating within it. The aim is to illustrate the complex nature of firm behavior and MNCs in international politics. The case study design and thematic analysis identify reactions, actions, and policy positions expressed by the industry in a comprehensive document-based material consisting of public statement, press releases, and news published during 2025. Applying Strange’s (1994) framework of structural power and Strange and Stopford’s (Stopford et al., 1991) triangular diplomacy, this thesis broadens understandings of corporate political activity in trade policy and applications of structural power in analyses of firm behavior. The findings suggest that firms’ behavior is guided by structural power asymmetries where in relation to the EU, the industry asserted its strategic importance and collectively lobbied for policy changes with the threat of withdrawal, reflecting the industry’s economic power and control over production and security. In relation to the US, the industry complied with the Trump administration’s demands announcing billion-dollar investments in the US and signing individual deals to lower pharmaceutical prices in exchange for tariff exemptions, reflecting behavior guided by US control over market access and interfirm competition within the production structure.