President Trump is once again making headlines with his hard-hitting rhetoric around U.S. trade. In a recent CNBC interview, Trump said that he plans to put tariffs on pharmaceutical imports, not with a gentle touch but with the potential for rates to soar as high as 250% within the next eighteen months. The move, he argues, is all about bringing drug manufacturing back to American soil.
The initial plan, according to Trump, is to start with a comparatively “small” tariff targeting pharmaceuticals. If his proposals move ahead, that tariff would escalate sharply, first to 150% in about a year, and then all the way to 250%. Trump is hardly mincing words. He wants the U.S. to be less dependent on foreign drugmakers, especially as frustration mounts over the price American consumers pay for medicines compared to prices enjoyed abroad.
This sort of talk from Washington isn’t new, but the scale is. If enacted, these tariffs would constitute one of the most aggressive interventions in the pharmaceutical trade in U.S. history. Consider for a moment how this could play out: Pharmaceutical imports to the U.S. are massive, accounting for tens of billions of dollars each year. A 250% tariff would dramatically change the math for overseas manufacturers.
For global pharma giants with sprawling supply chains across Europe, India, and elsewhere, Trump’s threat is a warning shot. His stated goal is clear: He wants to see American factories humming with drug production, or at least to create enough economic incentive (or pain) for companies to consider making the move back. “We want pharmaceuticals made in our country,” Trump told CNBC.
The reaction within the pharmaceutical industry and among policy experts has ranged from skepticism to outright alarm. Many generic drugs used in the U.S. are manufactured in India, and their prices are already razor-thin. For those low-cost generics, even a 20% to 25% tariff could wipe out any profit, raising the very real possibility those drugs might simply vanish from the American market. If Trump’s upper-bound tariff of 250% came into effect, some industry leaders believe it could devastate the supply and affordability of generic medicines in the U.S.
There are also important international ramifications. Earlier this year, Trump had signaled he was considering a 200% tariff, so the latest figure represents an escalation. America’s trade partners, including the European Union, have so far only faced pharmaceutical tariffs of around 15% under recent U.S. deals, making this new proposal look especially severe by comparison. There’s little doubt global leaders are watching these developments nervously, as American health care represents one of the most lucrative markets in the world.
Looming over all of this is a broader investigation launched by the Trump administration into the national security implications of pharmaceutical supply chains. There’s a desire among policymakers to see more drug manufacturing on U.S. soil, motivated partly by disruptions during the COVID-19 pandemic and more recently by geopolitics. However, the application of Trump’s proposed tariffs could have unpredictable consequences, including higher drug prices for U.S. patients and significant pushback from foreign governments and manufacturers.
Trump has promised a more detailed announcement on pharmaceutical tariffs “within the next week or so.” If his plan is executed as described, the coming year and a half could see some of the most dramatic changes to the way Americans access, and pay for, their medicines in a generation.
