What the tariffs actually do
In a post on Truth Social, former President Donald Trump announced a 100% tariff on branded or patented pharmaceutical products imported into the United States, unless a company has an active project to build manufacturing capacity within the U.S. The policy is slated to take effect on October 1, 2025. Up to now, most pharmaceutical imports had been exempt from the reciprocal tariffs Trump has threatened in other sectors, a position that began to shift as Washington opened a national security review into the pharma supply chain.
The plan also includes two notable carve-outs. First, tariffs would not apply to generic drugs—drugs that use the same ingredients and act the same way as existing branded versions. Second, firms that produce drugs in the United States or that are actively planning to build production on U.S. soil would be shielded. Trump specified that the exemption applies to products if construction has started—he described this as firms “breaking ground” or being “under construction.”
Both exemptions are ambiguous in practice, leaving investors and industry executives anxious about how decisions will be judged. Trade policy experts warn that the definitions of “generic” and “build” could be interpreted in many ways, potentially creating a swamp of eligibility criteria rather than a clean rulebook.
Who pays—immediate and longer-term effects on drugmakers
Analysts signal that the impact will hinge on which firms can demonstrate the U.S. manufacturing carve-out and which cannot. Deborah Elms of the Hinrich Foundation cautions that differentiating between branded and generic drugs can be murky, given the interwoven nature of many products. The practical question: can a company claim a tariff exemption by pointing to a local build even if its supply chain remains globally integrated?
Some observers argue the effect may not be as dramatic as feared. Neil Shearing of Capital Economics notes that for many multinationals, a significant share of production already occurs in the United States or is planned domestically, which could shield them from tariffs. He also highlighted that recent commitments by major players—like Eli Lilly, AstraZeneca, Roche, and GSK—to expand U.S. manufacturing could tilt the balance toward exemption.
Nonetheless, the broader policy shift has the potential to raise the cost of bringing new branded therapies to market or maintaining existing ones, especially if the U.S. domestic production footprint does not materialize as quickly as hoped. In the absence of clear rules, executives may delay investments or restructure supply chains to optimize tariff exposure.
Impact on consumers and the supply chain
For U.S. patients, the immediate concern is higher drug prices. Critics say tariffs distort the incentives structure that helps keep medicines affordable and accessible, especially for specialty therapies with long development cycles. While some argue that domestic production could strengthen supply resilience, others warn that higher costs and potential shortages could follow if tariffs disrupt established global manufacturing networks.
Industry responses have been swift. European and Asian pharmaceutical firms saw declines in shares as investors reassessed risk, while industry groups warned that the policy could slow patients’ access to lifesaving treatments. A key question is whether the net effect will be offset by gains from a more secure U.S. manufacturing base or if costs will simply be passed through to consumers.
Global implications and the geopolitical backdrop
U.S. pharma imports totaled around $213 billion in 2024, with Ireland, Germany, Switzerland, Singapore, and India among top exporters. The European Union has ongoing trade arrangements that cap pharma tariffs at relatively modest levels (around 15%), which could soften the impact on EU suppliers. Still, policymakers in Ireland and elsewhere say they will monitor the situation closely. For countries that predominantly supply generic products, a broader tariffs approach could present an opportunity to expand manufacturing in other regions and capitalize on any shifts in demand.
Industry voices from within Europe and Asia warn that higher costs risk pricing patients out of access in the near term, while advocates for onshoring emphasize national security and supply-chain resilience as broader benefits. The truth, as always, may lie in the details that follow in the rulemaking process and subsequent market responses.
What to watch next
The most critical questions remain: how will Trump’s “build in America” clause be defined in practice, and how quickly will companies adjust their investment plans? Will generics truly be shielded, or could some semi-branded products fall outside the exemption? And how will U.S. consumers respond to any price shifts in the fastest-growing drug markets?
As the October 2025 start date approaches, the industry will be watching closely for clarity on eligibility, timing, and enforcement. The policy represents a high-stakes bet on reshaping the U.S. pharmaceutical landscape, with potential ripple effects across global trade, investment decisions, and patient access to medicines.
