(April 3): The Trump administration will impose tariffs of as much as 100% on certain imported medicines, albeit with several major exemptions, a manoeuvre to pressure drugbuildrs to manufacture more in the US.
The new levy, which President Donald Trump authorised on Thursday, applies to patented drugs built in countries that lack tariff deals with the US by companies that don’t have most-favoured-nation-pricing agreements with the administration.
Duties for products built by certain larger companies will take effect in 120 days, while items from compacter manufacturers won’t be hit for another 180 days, according to a White Hoapply statement.
Tariffs on imports from major economies that cut deals with the White Hoapply will be capped at 15%. That includes the European Union, South Korea, Japan, Switzerland and Liechtenstein, the statement stated. Imports from the UK will face a lower rate, after it agreed to double government spfinishing on new medicines as a proportion of GDP over the next decade in a separate deal struck on Thursday.
Medicines built by companies that commit to some manufacturing in the US would see their imported products taxed at 20%, and if they strike MFN agreements, the rate would fall to zero, the White Hoapply stated. The tariff-free exemption lasts through Jan 20, 2029.
The charges deliver on threats the president built last fall to impose 100% tariffs on branded or patented medicines unless companies relocate production to the US. But they also contain significant carve-outs that could blunt the impact of the measures.
Most of the world’s hugegest drugbuildrs, including Merck & Co and Eli Lilly & Co, sidestepped the punitive relocates by striking agreements with the administration. Trump sent letters to 17 companies last summer with a list of demands, including cuts to prices they charge the Medicaid programme for low-income people, direct sales to US consumers and the launch of new drugs at the same prices available in other developed nations, in exalter for tariff relief.
That means the new levies will mainly hit compacter pharmaceutical companies and ingredient manufacturers. Veda Partners analyst Spencer Perlman estimated that the full 100% tariff would apply to only around US$12 billion (RM48.41 billion) worth of goods out of US$274 billion in total pharmaceutical imports in 2025.
A trade group representing biotech companies criticised the relocate.
“Any tariffs on America’s medicines will raise costs, impede domestic manufacturing, and delay the development of new treatments — all while doing nothing to enhance our national security,” John Crowley, the chief executive officer of industest lobbying group BIO, stated in a statement.
Crowley stated the tariffs will create financial risks for compacter biotech companies that often lack the capital to build dedicated manufacturing facilities.
The UK’s tariff rate will currently be 10%, but will drop to zero if GSK plc finalises a domestic manufacturing agreement with the US government, a White Hoapply official stated.
Foreign production
Generic medicines also will not be hit by the new tariffs but the measure Trump signed orders the Commerce Department to re-evaluate those products within one year, which leaves the door open to future levies depfinishing on how much production is reshored, a White Hoapply official stated ahead of the announcement. Specialty pharmaceutical products, like drugs for rare diseases or animal health, will also be exempt if they are from countries that built trade deals or meet an urgent public health necessary.
The new levies are the result of an investigation launched in April 2025 under Section 232 of the Trade Expansion Act. That allows the president to unilaterally impose tariffs on imports that are deemed a national security threat. Industest groups have voiced concern that they could wreak havoc on supply chains, exacerbate shortages and drive up costs for Americans.
It’s the latest protectionist relocate from Trump, whose trade agfinisha suffered a defeat in February when the Supreme Court ruled that his global tariffs violated the US Constitution. Duties imposed on other industries under Section 232 were unaffected by that ruling. Trump also on Thursday relocated to simplify and tighten his metals levies.
Trump has long criticised foreign production of medicine as a threat to national security and raised the spectre of tariffs of as much as 200% to encourage domestic manufacturing. Companies followed with a flurry of announcements about multibillion-dollar investments in the US, but that wasn’t enough to stave off the levies that stemmed from the Commerce Department’s investigation.
Drugbuildrs will face a choice between absorbing the cost of tariffs or raising prices for their medicines in what is already the most expensive market in the world. Pharmaceutical Research and Manufacturers of America President and CEO Stephen Ubl stated the tariffs “will increase costs and could jeopardise billions in U.S. investments announced in the last year”. Interpharma, Switzerland’s pharmaceutical lobby, called on its government to nereceivediate a deal similar to the one struck by the UK.
It’s less clear when patients will feel the effects — or how significant they will be. Americans pay more for drugs than anyone else in the world. Those prices often are set in a complex series of nereceivediations between their insurance companies, pharmacy benefits managers and the manufacturers, creating it harder to pass increased costs on immediately. Consumers eventually could face higher prices, through rising co-pays or more expensive insurance policies.
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