The Trump administration will impose tariffs of as much as 100% on certain imported medicines, albeit with several major exemptions, a maneuver to pressure drugmakers to manufacture more in the US.
The new levy, which President Donald Trump authorized on Thursday, applies to patented drugs made in countries that lack tariff deals with the US by companies that don’t have most-favored-nation-pricing agreements with the administration.
Duties for products made by certain larger companies will take effect in 120 days, while items from smaller manufacturers won’t be hit for another 180 days, according to a White House statement.
Tariffs on imports from major economies that cut deals with the White House will be capped at 15%. That includes the European Union, South Korea, Japan, Switzerland and Liechtenstein, the statement said. Imports from the UK will face a lower rate, after it agreed to double government spending on new medicines as a proportion of GDP over the next decade in a separate deal struck on Thursday.
Medicines made 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 House said. The tariff-free exemption lasts through Jan. 20, 2029.
The charges deliver on threats the president made last fall to impose 100% tariffs on branded or patented medicines unless companies move production to the US. But they also contain significant carve-outs that could blunt the impact of the measures.
Most of the world’s biggest drugmakers, including Merck & Co. and Eli Lilly & Co., sidestepped the punitive moves 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 program 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 exchange for tariff relief.
That means the new levies will mainly hit smaller pharmaceutical companies and ingredient manufacturers. Veda Partners analyst Spencer Perlman estimated that the full 100% tariff would apply to only around $12 billion worth of goods out of $274 billion in total pharmaceutical imports in 2025.
A trade group representing biotech companies criticized the move.
“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 industry lobbying group BIO, said in a statement.
Crowley said the tariffs will create financial risks for smaller biotech companies that often lack the capital to build dedicated manufacturing facilities.
The United Kingdom’s tariff rate will currently be 10%, but will drop to zero if GSK Plc finalizes a domestic manufacturing agreement with the US government, a White House official said.
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 depending on how much production is reshored, a White House official said 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 made trade deals or meet an urgent public health need.
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. Industry 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 move from Trump, whose trade agenda 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 moved to simplify and tighten his metals levies.
Trump has long criticized foreign production of medicine as a threat to national security and raised the specter 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.
Drugmakers 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 said the tariffs “will increase costs and could jeopardize billions in U.S. investments announced in the last year.” Interpharma, Switzerland’s pharmaceutical lobby, called on its government to negotiate a deal similar to the one struck by the United Kingdom.
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 negotiations between their insurance companies, pharmacy benefits managers and the manufacturers, making 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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