Trump’s Drug Tariff Plan Risks Higher Costs, Shortages/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ President Donald Trump is preparing tariffs of up to 200% on imported pharmaceuticals, a move he says will revive U.S. manufacturing. Analysts warn the policy could raise drug prices, trigger shortages, and push generics out of the market. Drugmakers are already stockpiling medicine ahead of the possible 2026 rollout.
Trump Drug Tariff Plans Quick Looks
- Trump targets imported drugs with tariffs as high as 200%
- Current U.S. system allows most pharmaceuticals duty-free entry
- Analysts warn prices could rise 10–14% even with modest tariffs
- Generics, which make up 92% of U.S. prescriptions, most at risk
- U.S. runs nearly $150 billion trade deficit in pharmaceuticals
- Companies like Roche and Johnson & Johnson investing billions in U.S. sites
- Active pharmaceutical ingredients (APIs) mostly made abroad: 97% of antibiotics
- Trump delays implementation by 12–18 months to allow stockpiling
- National security cited as justification under Section 232
- Policy could force structural overhaul of U.S. drug supply chain
Trump’s Drug Tariff Plan Risks Higher Costs, Shortages
Deep Look
WASHINGTON — President Donald Trump has already slapped tariffs on steel, aluminum, autos, and a range of goods worldwide. Now he’s setting his sights on one of the most sensitive sectors yet: pharmaceuticals.
Trump has promised to impose import duties as high as 200% on foreign-made drugs, a dramatic departure from decades of duty-free entry for most pharmaceuticals. While the administration insists the move will bolster U.S. security and manufacturing, health economists warn it could raise drug prices, disrupt supply chains, and trigger shortages.
From Zero Tariffs to “Shock and Awe”
“This is an industry going from zero to potentially 200% tariffs,” said Maytee Pereira, a tax specialist at PwC, describing the plan as “shock and awe” for drugmakers.
A recent U.S.-EU trade deal already set a 15% tariff on certain European imports, but Trump’s broader proposal targets drugs made elsewhere. The White House argues the policy will end America’s reliance on foreign medicines, particularly from rivals like China.
Consumers Likely to Pay the Price
Health economist Diederik Stadig of ING warns the fallout will be severe for consumers.
“A tariff would hurt consumers most of all,” he wrote, noting that Americans would see costs rise directly at the pharmacy and indirectly through higher insurance premiums. Low-income households and seniors would bear the brunt.
Even a 25% tariff could lift U.S. drug prices by 10–14% as supplies dwindle.
Stockpiling Before the Storm
Trump has said he’ll delay enforcement for up to 18 months, giving companies time to stockpile medicines or shift manufacturing to the U.S. Analysts say major drugmakers already hold 6–18 months of inventory.
“Tariffs that don’t kick in until late 2026 may not hit consumers until 2027 or 2028,” said Jefferies analyst David Windley.
Still, even if the final levy lands below 200%, the uncertainty is rattling the pharmaceutical sector.
A Globalized Supply Chain
For decades, drugmakers have shifted production overseas to reduce costs, especially to China, India, Ireland, and Switzerland. As a result, the U.S. pharmaceutical trade deficit has ballooned to nearly $150 billion annually.
The COVID-19 pandemic underscored the risks, with countries hoarding essential drugs and supplies. Trump’s team argues that tariffs are necessary for national security, citing Section 232 of the Trade Expansion Act of 1962, the same provision once used for steel tariffs.
Drugmakers React
Some companies are already expanding U.S. operations. Roche pledged $50 billion in new U.S. investment, while Johnson & Johnson plans $55 billion over the next four years. CEO Joaquin Duato even vowed to eventually supply the U.S. market entirely from domestic sites.
But analysts note that building pharmaceutical factories is costly, slow, and unlikely to fully shield companies from tariffs — since most drugs rely on imported active pharmaceutical ingredients (APIs). According to the American Action Forum, 97% of antibiotics, 92% of antivirals, and 83% of popular generics contain at least one foreign-made ingredient.
“The only way to truly avoid tariffs would be to rebuild the supply chain end-to-end in the U.S.,” Pereira said.
Generics Most at Risk
Brand-name drugmakers, with larger profit margins, may absorb costs or shift production. Generic manufacturers, however, operate on razor-thin margins and could abandon the U.S. market.
That would be highly disruptive: generics account for 92% of prescriptions in the U.S. A production halt in India just two years ago led to chemotherapy shortages, underscoring how fragile these markets are.
“Generics are not resilient markets,” said Marta Wosińska of the Brookings Institution. “If there’s a shock, it’s hard for them to recover.” She argued tariffs alone won’t persuade generics to build U.S. factories without significant government financing.
The Bigger Picture
Trump has positioned the tariffs as part of a broader strategy to force lower drug prices, even as he pressures companies with demands for “most-favored nation” pricing in the U.S. He also touts reshoring as a way to revive American manufacturing.
But critics say the strategy risks creating a fragile system where patients face higher costs and fewer options.
“In an ideal world, we’d produce everything domestically,” Wosińska said. “But that requires money, planning, and a redesign of the entire system. The real question is: how much are we willing to pay for it?”
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