U.S. Imposes 100% Tariffs on Pharmaceuticals to Encourage Local Manufacturing, Raising International Trade Worries

On September 25, 2025, the U.S. government revealed it would impose a 100% tariff on imported branded and patented pharmaceuticals starting October 1, 2025, unless manufacturers have already begun building production facilities within the United States. This measure, detailed by President Donald Trump on Truth Social, is intended to encourage pharmaceutical companies to manufacture domestically, offering exemptions to those with U.S. sites that are either under construction or have started development. The tariff specifically targets drugs protected by intellectual property rights, while generic medications will not be affected title1 [ 1 ].

This tariff is part of a Section 232 national security review of pharmaceutical imports, a process previously used to levy tariffs on steel and aluminum. According to the U.N. Comtrade Database, U.S. pharmaceutical imports soared to $213 billion in 2024, nearly three times higher than ten years ago. The policy is part of a larger effort to address supply chain risks, with Trump asserting that these tariffs will "bolster American manufacturing and lessen dependence on overseas sources for essential medicines" title1 [ 1 ].

Industry experts and drugmakers have voiced apprehension about the possible fallout. Louise Loo, an analyst at Oxford Economics, cautioned that the tariffs might deliver a "significant financial blow to U.S. consumers," noting that 20% of U.S. pharmaceutical imports come from Asia. She also pointed out exceptions, such as protections for Japan and the European Union under trade agreements, and exemptions for companies actively building U.S. facilities title2 [ 2 ]. Asian stock markets responded quickly, with Japan’s Topix Pharma Index dropping 1.47%, and shares of Daiichi Sankyo and Chugai Pharmaceutical falling by 2.11% and 3.64%, respectively title8 [ 8 ].

Pharmaceutical firms have shown varied reactions. While some, like

and , are already expanding their U.S. manufacturing—J&J recently committed $55 billion to domestic investments—others warn that the tariffs could redirect funds away from research and worsen drug shortages. CEO Joaquin Duato emphasized the potential for supply chain issues, stating that "tariffs can create shortages," and suggested that tax breaks would be a better way to promote U.S. production title1 [ 1 ]. The Pharmaceutical Research and Manufacturers of America (PhRMA) cautioned that tariffs might jeopardize recent investments in U.S. manufacturing and innovation, with Alex Schriver stating, "every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or future cures" title3 [ 3 ].

There are still major economic and logistical hurdles. Evan Seigerman, an analyst at BMO Capital Markets, argued that moving pharmaceutical manufacturing back to the U.S. is both complicated and expensive, and that global supply chains are unlikely to change rapidly. He expects most companies to postpone significant decisions until after the 2024 election due to uncertainty about the future of Trump’s policies. Meanwhile, analysts like Steve Scala from TD Cowen observed that companies with a strong U.S. manufacturing presence, such as Eli Lilly and

, may be better equipped to handle the tariffs than international competitors like and Roche title1 [ 1 ].

The administration’s approach could have far-reaching effects on global trade and healthcare. The 100% tariff is likely to drive up drug prices, especially for patented medicines, as companies pass on the extra costs to consumers. Drug pricing expert Antonio Ciaccia noted that the combination of Medicaid rebate rules and tariffs could force companies to raise prices even more than usual. This policy is also part of Trump’s broader tariff strategy, which includes 50% duties on kitchen cabinets and 25% on heavy trucks, aiming to protect U.S. industries from being "flooded" by foreign products title4 [ 4 ].