Trump’s Plan to Impose Major Drug Tariffs Sparks Fears Over Global Access and Pharma Supply Chains

U.S. President Donald Trump announced plans to impose “major” tariffs on imported pharmaceuticals, potentially ending decades of inexpensive global trade in medicines. For many years, the U.S. and other countries have maintained little to no tariffs on finished drugs, largely due to a World Trade Organization (WTO) agreement from 1995 that sought to keep medicines affordable. At an event hosted by the National Republican Congressional Committee, Trump stated that the tariff would encourage drug companies to relocate their operations to the U.S.

104% Tariffs on Chinese Goods Escalate Global Trade Tensions, Signal Wider Push for U.S. Manufacturing Reshoring

This change follows Trump’s implementation of a blanket 10% tariff on other imports last week, part of a broader initiative to bring manufacturing back to the U.S. His new “reciprocal” tariffs, which include a 104% duty on goods from China, took effect on Wednesday, escalating the global trade war and further unsettling markets.

During a Republican fundraiser on Tuesday, Trump stated, “We’re going to be announcing very shortly a major tariff on pharmaceuticals. And when they hear that, they will leave China.” He also told reporters aboard Air Force One last week that the upcoming pharmaceutical tariffs would reach levels “you haven’t really seen before,” and that they would be announced “in the near future.”

Pharmaceutical stocks declined early Wednesday following Trump’s renewed commitment to introducing tariffs specifically targeting the pharmaceutical sector. Shares of major U.S.-based companies, including Eli Lilly, AbbVie, Bristol Myers Squibb, Regeneron, Merck, Pfizer, Johnson & Johnson, and Amgen, initially dropped between 2% and 4%, though most recovered later in the day. Some foreign-based companies, such as AstraZeneca, Novo Nordisk, and Novartis, also saw gains, while GSK remained down by 5%.

New U.S. Tariffs on Global Pharmaceuticals Could Drive Up Drug Prices for American Consumers

President Trump has stated that imposing tariffs will encourage pharmaceutical companies to relocate manufacturing operations to the United States. This move follows decades of decline in domestic drug manufacturing, as many companies shifted key production stages to countries like China and India to take advantage of lower labor and operational costs. According to the United Nations COMTRADE database, U.S. pharmaceutical imports totaled nearly $213 billion in 2024, more than two and a half times the amount recorded a decade earlier.

The U.S. has long imported large volumes of finished medicines from regions such as India, Europe, and China without imposing tariffs on buyers, although some duties still apply to active pharmaceutical ingredients (APIs) used in drug production. India supplies nearly 50% of generic medicines used in the United States, helping reduce national healthcare spending by billions of dollars. 

Currently, U.S. imports of Indian pharmaceuticals face little to no tax, while Indian buyers pay nearly 11% in duties on American-made drugs.Indian pharmaceutical companies have warned that new U.S. tariffs would compel them to raise prices, potentially increasing medical costs for American consumers.

European pharmaceutical companies are also monitoring the situation closely. Following a high-level meeting on Tuesday between European Commission President Ursula von der Leyen and leading pharmaceutical firms, the European Federation of Pharmaceutical Industries and Associations (EFPIA) warned that proposed U.S. tariffs could incentivize companies to shift production from Europe to the United States.

EFPIA, which represents companies including Bayer, Novartis, and Novo Nordisk, the manufacturer of the widely used type 2 diabetes drug Ozempic, raised concerns that escalating trade barriers may undermine Europe’s position as a central hub in the global pharmaceutical supply chain.

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Denisse Sandoval