Introduction to New Tariffs
Similar to the previous tariff bombs of the US President, the news was suddenly all over social media, with a lot of unclear information. In a contribution on his social media website on Thursday, Donald Trump announced steep new tariffs for US pharmaceutical imports. "From October 1, 2025, we will impose a 100% tariff on every brand or patented pharmaceutical product, unless a company builds its pharmaceutical production work in America," he wrote.
Previous Tariff Exceptions
So far, pharmaceutical goods have been freed from the so-called mutual tariffs that Trump announced in April. This was mainly due to the fact that the US government opened a national security examination at the beginning of this year, in which the possibility of tariffs for pharmaceuticals was checked. Trump regularly threatened that pharmaceutical products have been hit with tariffs since his return in January, so that the move itself is not a big surprise, even if the timing is.
What the Step Means for Drug Companies
There were two possible exceptions in Trump’s announcement. He said that the tariffs will not apply to so-called generic medication, apparently medication and medicines that use the same ingredients and are used in the same way as existing brand medication that is originally covered by chemical patents. Deborah Elms, a trade policy expert, says that the distinction between brand and generics is not entirely clear because there can be a "big difference". The other exception that Trump has announced is that the tariffs do not apply to companies that produce drugs in the USA or who want to build a factory there.
Carve-Outs and Confusion
He wrote that "building" is defined as "soil" and/or "under construction". Therefore, there will be no tariff for these pharmaceutical products when the construction has started, "he added. According to Elms, this carve-out could be important, but emphasized that it is a social media contribution from Trump because it is just a social media post. If she were now a pharmaceutical executive, she would "buy a shovel and dig a hole somewhere", she suggested that her company had broken the ground and prepared for factory development. "It is unclear what would be enough to avoid tariffs. You could create many criteria that are either qualified or disqualified. I can imagine that there will be a lot of confusion about it," said Elms.
Impact on the Pharmaceutical Industry
Neil Shearing, the chief economist of Capital Economy, believes that the announcement is "not quite as big as at first glance" because the liberation for companies that produce in the United States is "more important". Many of the world’s largest pharmaceutical companies either have already announced production in the USA or have announced plans to build production in the near future. It seems to be out of the new tariffs. Several large pharmaceutical companies have recently committed to start building new buildings in the USA, such as Eli Lilly, Astrazeneca, Roche Holding, and GSK.
Countries Affected by the Tariffs
According to the United Nations Comtrade database, the United States imported pharmaceutical products worth around 213 billion US dollars in 2024. Data from the Ireland, Germany, Switzerland, Singapore, and India identified with an economic complexity as the five most important exporters of pharmaceuticals in the United States in July 2025. However, it is unclear how pharmaceutical companies from Ireland, Germany, or other EU nations will be affected. This is because in the case of details of the US-EU trade agreement at the end of August, the EU Pharma-Zölle would be limited to 15% in line with most other tariffs in the deal.
Effects on Consumers
Trump has long claimed that the tariffs would promote US consumers. However, Deborah Elms argues that this will not be the case for various reasons and that patients "pay a lot more money" "for pharmaceutical products". Admit that there could be some "long-term advantages" for the homeshoring of pharmaceutical production, such as securing the offer, "it means that high US production costs often make sense that pharmaceuticals are manufactured elsewhere. And so you can expect "higher costs for US patients" and fewer pharmaceutical imports from abroad. "In many cases, they will not reach US patients at all. So … it is also access problems. What is the advantage of it from the perspective of consumers?" Almost none.
