US President Donald Trump has imposed tariffs on products from almost every country on earth. He’s targeted specific imports, including autos, steel and aluminium. But he isn’t done yet.
Trump has promised to impose hefty import taxes on pharmaceuticals, a category of products he’s largely spared in his trade war. For decades, in fact, imported medicine has mostly been allowed to enter the United States duty-free.
That’s starting to change. US and European leaders recently detailed a trade deal that includes a 15 per cent tariff rate on some European goods brought into the United States, including pharmaceuticals. Trump is threatening duties of 200 percent more on drugs made elsewhere. “‘Shock and awe’ is how Maytee Pereira of the tax and consulting firm PwC describes Trump’s plans for drugmakers. “This is an industry that’s going from tariffs to the potential of 200 per cent.”
Trump has promised Americans he’ll lower their drug costs. But imposing stiff pharmaceutical tariffs risks the opposite and could disrupt complex supply chains, drive cheap foreign-made generic drugs out of the US market and create shortages. “A tariff would hurt consumers most of all, as they would feel the inflationary effect.
Directly when paying for prescriptions at the pharmacy and indirectly through higher insurance premiums,” Diederik Stadig, a healthcare economist with the financial services firm ING, wrote in a commentary last month, adding that lower-income households and the elderly would feel the greatest impact.
The threat comes as Trump also pressures drugmakers to lower prices in the United States. He recently sent letters to several companies telling them to develop a plan to start offering so-called most-favoured nation pricing here. But Trump has said he’d delay the tariffs for a year or a year and a half, giving companies a chance to stockpile medicine and shift manufacturing to the United States—something some have already begun to do.
Analyst David Risinger said in a July 29 note that most drugmakers have already increased drug product imports and may carry between six and 18 months of inventory in the US. Jefferies analyst David Windley said in a recent research note that tariffs that don]t kick in until the back half of 2026 may not be felt until 2027 or 2028 due to stockpiling.