Trump’s latest tariff move arrives as a social-media surprise, with a 100% duty on branded or patented pharmaceutical products entering the United States unless manufacturers are building or planning to build US facilities. The post, made on Truth Social, did not include formal legislation, leaving industry and investors to parse what such a policy would entail and how it would be enforced.
What the plan says and possible exemptions
The president signaled two potential carve-outs: first, generic drugs could be exempt because they use the same ingredients and are used the same way as branded versions; second, firms that produce in the United States or are building US plants would face no tariff. Yet, as analysts note, the exact criteria remain undefined. The phrase “IS BUILDING” may be interpreted as “ground-breaking” or “under construction,” potentially allowing a broad range of investments to dodge the duties. Several experts warn that the criteria could become a major source of dispute and delay implementation.
Who stands to lose the most?
Countries and companies that export large volumes of branded medicines to the US without significant US production could face higher costs, with knock-on effects for patients and payors. The United Nations Comtrade data show the US imported roughly $213 billion of pharma products in 2024, with Ireland, Germany, Switzerland, Singapore and India among the top suppliers. European Union exports account for about 60% of US pharma imports. However, if the EU’s pharma tariffs are capped at 15% under the new deal, the impact may be tempered, at least for some products. Still, analysts caution that a 15% cap applies only to certain products and does not guarantee uniform relief across all medicines.
Industry reactions and potential buffers
Industry voices have pointed to several mitigating factors. Companies with existing or planned US production could be shielded by the “IS BUILDING” clause, reducing the anticipated pain for major players who already have facilities in the US or plan new ones. Analysts such as Neil Shearing of Capital Economics say the impact may be smaller than a pure 100% tariff implies because many multinationals with US footprints would qualify for exemptions. Conversely, European federations warn that tariffs could raise costs, disrupt supply chains and limit patient access to lifesaving therapies.
Impact on prices, patients and the supply chain
For US consumers, the tariff would likely raise drug prices or delay access to new therapies if supply chains re-route production. Deborah Elms of the Hinrich Foundation suggests that higher costs and possible reductions in imports could harm patients, while some long-run benefits could be improved domestic resilience. In the short term, stock markets reacted negatively to the news, with shares of several Asian and European pharma groups falling as investors weighed the potential for disruption.
Global implications
US pharma imports are a key economic artery, and the EU-US trade framework already hints at caps that could blunt some effects. Still, the broader impact on global supply chains, pricing and patient access remains uncertain. The prospect of shifts in sourcing, reconfiguration of manufacturing networks, and the potential for retaliation or countermeasures will keep policy-makers and market participants attentive.
What happens next?
With the announcement lacking legislative detail, the policy will need congressional action or executive clarifications to become binding. The pharmaceutical industry will watch closely for how “IS BUILDING” is defined, which products are truly exempt, and how quickly any transition would occur. In the meantime, the industry is weighing accelerated US investments already announced by major firms against the risk of higher costs and potential complications in global supply chains.
