Commonly used drugs like Novo Nordisk’s Ozempic were exempt from President Donald Trump’s expansive reciprocal tariffs announced earlier this week, which are expected to drive prices up across several industries, though analysts and Trump have warned that future tariffs will likely target imported medicines.
Trump previously floated a 25% tariff on all imported drugs, though they were unaffected by recent ... More
Trump imposed a baseline 10% on most U.S. imports in an address on Wednesday, though pharmaceuticals were among the goods exempt from the sweeping tariffs, in addition to some energy products, minerals and chemicals used in energy, manufacturing and vaccine production.
While announcing his reciprocal tariffs, Trump warned pharmaceutical companies to return production to the U.S., saying, “[They] are going to come roaring back … they’re all coming back to our country because if they don’t, they've got a big tax to pay.”
Trump floated tariffs on semiconductors and pharmaceuticals in February, suggesting levies would be “25% and higher” and would become “very substantially higher over a course of the year” unless companies shift production to U.S.-based facilities.
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It’s unclear how pharmaceutical companies would respond to tariffs, including whether tariffs would drive up the prices for generic drugs. Researchers from the University of Toronto, the Hertie School in Berlin and the University of Pittsburgh reported in an analysis published Monday that $3 billion of pharmaceuticals sold in the U.S. rely on Canadian manufacturing, and tariffs on pharmaceuticals would likely add $750 million in costs. Extending tariffs to other exporters like China, India and Europe would likely “worsen the predicted effects,” which include increased healthcare costs and disrupt drug supplies, researchers claimed. Diederik Stadig, a healthcare analyst at ING, estimated that tariffs on all pharmaceutical imports to the U.S. would increase the price for low-cost, generic drugs by up to $0.12 per pill, or an additional cost of roughly $42 per year. More expensive drugs, like those used to treat cancer, could increase by up to $10,000, Stadig said.
The U.S. largely relies on European Union countries for pharmaceutical imports, with 20% of imports coming from Ireland, 10.7% from Germany and 8.5% from Switzerland, according to estimates from Stadig. India (6.2%), Singapore (5.6%) and Japan (3.7%) also supply a portion of pharmaceutical imports, Stadig reported. The EU and Singapore face a baseline 10% tariff, whereas India and Japan face levies of 26% and 24%, respectively. Active ingredients for several drugs or medical devices are produced outside of the U.S.:
Some companies, like Novo Nordisk and Eli Lilly, have spent billions to expand manufacturing in the U.S. in recent years, though construction on new facilities for either company is expected to take years to complete. It’s unlikely that pharmaceutical manufacturers in India, which account for 6% of all U.S. drug imports, will shift manufacturing to the U.S., Stadig said, as production in India is much cheaper. If India-based companies did decide to move to the U.S., however, Stadig said the construction of new facilities would take about 10 years.
Trump imposed sweeping reciprocal tariffs on most U.S. trade partners on Wednesday, which Trump had referred to as “Liberation Day.” The levies were roughly half of the total charges imposed on the U.S., Trump said, arguing his approach was “kind.” Some economists and analysts criticized Trump’s tariff formula, however, including the global political scientist Ian Bremmer, who pointed out Trump’s numbers were based on a simpler calculation than what U.S. trade officials claimed. Bremmer wrote Trump’s formula is “incredibly stupid.” During his reelection campaign, Trump floated a universal 20% tariff on all imported goods and later announced a 25% tariff on all goods imported from Canada and Mexico. A 10% tariff was also levied on China. The latest tariffs are expected to raise prices for several commonly used products like coffee, chocolate and even iPhones.
Here’s What Will Cost More After Trump’s Tariffs: Coffee, Cars—And Possibly A $2,300 iPhone (Forbes)
Trump Announces Reciprocal Tariff Rates—54% For China, 20% On EU (Forbes)
Trump Promised To Make Your Medicines Cheaper. His Tariffs Will Make Them More Expensive (Forbes)